Wednesday, November 6, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Shopify Inc. (SHOP), The Sherwin-Williams Co. (SHW) and Fortinet, Inc. (FTNT), as well as a micro-cap stock Hamilton Beach Brands Holding Co. (HBB). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Shopify’s shares have outperformed the Zacks Internet - Services industry over the past year (+30.8% vs. +29.4%). The company is benefiting from strong growth in its merchant base. New merchant-friendly tools like Bill Pay, Tax Platform, Collective and the Marketplace Connect app are helping it to win new merchants regularly.

Strong adoption of these solutions holds promise for Shopify’s prospects. Integration of Shop Pay Installments into the point-of-sale terminal and general availability of Pro makes it easier for merchants to discover and engage their customers. Expansion of back-office merchant solutions to more countries is also strengthening Shopify’s international footprint.

An expanding partner base that includes TikTok, Snap, Pinterest, Criteo, IBM, Cognizant, Amazon and Adayen are expected to expand its merchant base further. However, persistent inflation and cautious consumer spending are headwinds.

(You can read the full research report on Shopify here >>>)

Shares of Sherwin-Williams have outperformed the Zacks Chemical - Specialty industry over the past year (+52.9% vs. -0.8%). The company’s acquisition of Valspar fortified its position as a leading global paints and coatings provider by expanding its brand portfolio and customer relationships in North America and enhancing its global finishes business. Its aggressive cost-control measures and restructuring initiatives are resulting in strong cash flow, significant shareholder returns and debt reduction.

However, challenges in the heavy equipment and transportation markets, customer destocking and reduced demand in general industries may hurt revenues. North American demand remains weak in the do-it-yourself (DIY) sector. The disruptions related to hurricanes may also adversely impact its performance.

(You can read the full research report on Sherwin-Williams here >>>)

Fortinet’s shares have outperformed the Zacks Internet - Software industry over the past year (+55.5% vs. +45.2%). The company is benefiting from rising demand from large enterprise customers and growth in the company's security subscriptions. The company is also gaining from the robust growth in Fortinet Security Fabric, cloud and Software-defined Wide Area Network (SD-WAN) offerings.

Higher IT spending on cybersecurity is further expected to aid Fortinet in growing faster than the security market. We expect 2024 net sales to rise 9.9% from 2023. The company has a strong balance sheet that bodes well for investors. The focus on enhancing its unified threat management (UTM) portfolio through product development and acquisitions is a tailwind for the company.

However, intensifying competition because of increasing consolidation in the security industry poses concerns. Increased hiring and mergers & acquisitions spending remain overhangs on profit margin.

(You can read the full research report on Fortinet here >>>)

Shares of Hamilton Beach Brands have outperformed the Zacks Household Appliances industry over the past year (+63.2% vs. +4.6%). This microcap company with market capitalization of $283.42 million is set for steady North American growth, driven by increased product placements, brand strength, and a digital-first marketing strategy. Expansion into premium appliances, like air purifiers and plant-based milk makers, now contributes 15% of revenue, boosting high-margin segments.

Hamilton Beach Brands’ acquisition of HealthBeacon marks an entry into home healthcare with a subscription model, offering strong growth potential. Digital transformation is a key driver, with 48% of U.S. consumer sales from e-commerce, enhancing brand trust.

Margin gains are supported by product mix optimization and cost controls, while solid working capital and pension adjustments improve cash flow. Additionally, global growth, especially in commercial food service and hospitality, diversifies revenue and strengthens Hamilton Beach’s position.

(You can read the full research report on Hamilton Beach Brands here >>>)

Other noteworthy reports we are featuring today include Eni S.p.A. (E), Willis Towers Watson Public Limited Co. (WTW) and Yum China Holdings, Inc. (YUMC).

Mark Vickery
Senior Editor

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Product Rollouts & Growing Merchant Base Aid Shopify (SHOP)

Acquisitions and Cost Actions to Aid Sherwin-Williams (SHW)

Fortinet (FTNT) Rides on Product Strength, Marketing Efforts

Featured Reports

Eni's (E) Focus on Renewables and Upstream Discoveries Aids
Eni's diversification into renewables and recent hydrocarbon discoveries should support its long-term growth prospects. However, its significant debt exposure concerns the Zacks analyst.

Willis Towers (WTW) Poised to Gain from Segmental Strength
Per the Zacks analyst, Willis Towers is set to gain from solid customer retention levels, growing new business and geographic diversification across segments. Yet, high costs weighing on margin ails.

Loans & Deposit Growth Aid Webster Financial, High Cost Ail
Per Zacks analyst, Webster Financial's organic strength is reflected by rising loans and deposits balances. Yet, rising expenses remain a concern.

Chemed (CHE) Gains from Improved Metrics, Cost Woes Worry
Per the Zacks analyst, Chemed's VITAS sees improved ADC and admissions due to strong hiring and retaining clinical staff, and the benefits of Covenant buyout. Yet, macroeconomic issues escalate cost.

Abercrombie's (ANF) Sturdy Comps Run to Propel Top-Line
Per the Zacks analyst, Abercrombie boasts impressive comparable sales run. Its progress on strategic initiatives, alongside strength in Abercrombie and Hollister brands should drive sales.

Jazz's (JAZZ) Oncology Drugs Fuel Sales & Diversification
While Jazz's sleep disorder portfolio has exhibited strong demand, the Zacks Analyst is impressed with the company's oncology drugs whose sales diversify the existing marketed portfolio.

Allegiant (ALGT) Rides on Air Travel Demand Amid High Expenses
The Zacks Analyst is impressed with the fact that increased air-travel demand is aiding Allegiant's top-line performance. However, rising operating expenses continue to weigh on the bottom line.

New Upgrades

Unit Expansion & Robust Loyalty Program Aid Yum China (YUMC)
Per the Zacks analyst, expansion initiatives, loyalty program, and long-term growth plans are encouraging. For 2024, the company still expects to open approximately 1,500 to 1,700 net new stores.

Diversified Business Model & Solid Buyouts Aid MasTec (MTZ)
Per the Zacks analyst, MasTec is benefiting from a diversified business model reflecting increasing backlog growth and accretive acquisitions. Also, a favorable project and price mix bode well.

Solid Commercial Business Aids First American Financial (FAF)
Per the Zacks analyst, First American is set to grow on solid commercial business and demand among millennials for first-time home purchases. Expanding valuation and data businesses also drive growth.

New Downgrades

Labor Shortage, Poor Financials Hit Huntington Ingalls (HII)
Per the Zacks analyst, the shipbuilding industry is facing labor shortages that might hurt the stock's performance. Moreover, its deteriorating financial ratios implies its poor financial position

Labor Costs, Poor Financials Hurt Spirit AeroSystems (SPR)
Per the Zacks analyst, labor and supply-chain cost growth on the B787 program as well as forward loss related to these might hurt Spirit AeroSystems. It also boasts a weak financial position

Sensing Solutions Slowdown, Rising Expenses Burden Sensata (ST)
Per the Zacks analyst, Sensata's performance is affected by a slowdown in the Sensing solutions segment. Underperforming products' exit and divestiture-related costs led to operating loss.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Sherwin-Williams Company (SHW) : Free Stock Analysis Report

Eni SpA (E) : Free Stock Analysis Report

Fortinet, Inc. (FTNT) : Free Stock Analysis Report

Willis Towers Watson Public Limited Company (WTW) : Free Stock Analysis Report

Shopify Inc. (SHOP) : Free Stock Analysis Report

Yum China (YUMC) : Free Stock Analysis Report

Hamilton Beach Brands Holding Company (HBB) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research