Tuesday, August 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 Berkshire Hathaway Inc. (BRK.B), Tesla, Inc. (TSLA) and Visa Inc. (V), as well a micro-cap stock AXIL Brands, Inc. (AXIL). 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 >>>

Berkshire Hathaway’s shares have modestly outperformed the Zacks Insurance - Property and Casualty industry over the year-to-date period (+16.5% vs. +15.4%). The company is one of the largest property and casualty insurance companies with numerous diverse business activities. A strong cash position supports earnings-accretive bolt-on buyouts and is indicative of its financial flexibility. 

Continued insurance business growth fuels an increase in float, drives earnings and generates maximum return on equity. The non-insurance businesses have also been doing well in the last few years. The addition of Pilot Travel Centers (PTC) has strengthened its energy business. A sturdy capital level provides further impetus. 

However, exposure to cat loss induces earnings volatility and also affects underwriting results. Huge capital expenditure remains a headwind. With the demise of Charles Munger, uncertainty looms over the company's performance.

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

Shares of Tesla have modestly outperformed the Zacks Automotive - Domestic industry over the past six months (+4.9% vs. +2.0%). The company has been plagued by shrinking automotive margins amid aggressive price cuts and discounts. The company expects its vehicle volume growth rate for 2024 to be noticeably lower than 2023 amid a cooling electric vehicle (EV) market. 

With competition intensifying in the EV space, Tesla’s focus on autonomous driving and artificial intelligence (AI) is expected to be a game changer. It aims to launch affordable vehicles, transition into an AI company and is banking on its robotaxi venture. 

The expected rollout of Tesla-supervised Full Self Driving (FSD) software in China and Europe by the end of the year will boost prospects. Additionally, TSLA’s Energy Generation and Storage business is thriving. While near-term challenges persist, long-term prospects appear promising, driven by its big bet on driverless software and AI.

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

Visa shares have gained +6.8% over the past year against the Zacks Financial Transaction Services industry’s gain of +8.3%. The company’s strategic acquisitions and alliances are fostering long-term growth and consistently driving its revenues. 

Visa, fueled by persistent increase in payments, cross-border volumes and sustained investments in technology, is witnessing significant profit growth. The ongoing shift to digital payments is advantageous for Visa, with strong domestic volumes supporting its overall performance. A robust cash position enables the company to enhance shareholder value. 

However, elevated operating expenses pose margin challenges. We expect adjusted operating expenses to jump 10.1% in fiscal 2024. It is witnessing a volatile cash volume from the Asia Pacific and CEMEA regions. Moreover, rising client incentives will affect its adjusted revenues.

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

Shares of AXIL Brands’ have underperformed the Zacks Consumer Products - Staples industry over the past year (-61.6% vs. -12.0%). This microcap company with market capitalization of $27.98 million is witnessing rising operating expenses and declining gross profit margins signal profitability challenges. Inventory management issues and high customer concentration risks add to the concerns. 

Increased accounts payable and reduced cash flow from operating activities highlight cash flow volatility. As such, the stock warrants a cautious stance. Nevertheless, AXIL is expanding globally, diversifying revenue streams across the United States, Canada, the EU and Asia. 

Strategic initiatives, such as the NASCAR-branded hearing protection product deal with Racing Electronics and a distribution agreement with Kinsey’s, boost market penetration. The strategic share repurchases in March 2024, reducing outstanding shares by 55%, enhance shareholder value. Third-quarter fiscal 2024 revenue growth of 14.4% shows effective sales strategies and business expansion.

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

Other noteworthy reports we are featuring today include Morgan Stanley (MS), The Southern Company (SO) and Cognizant Technology Solutions Corporation (CTSH).

Director of Research

Sheraz Mian

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>>>