Thursday, September 19, 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 Exxon Mobil Corp. (XOM), Salesforce, Inc. (CRM) and BHP Group Ltd. (BHP), as well as a micro-cap stock Oil-Dri Corp. of America (ODC). 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 >>>

Exxon Mobil shares have outperformed the Zacks Oil and Gas - Integrated - International industry over the past year (+2.2% vs. -1.4%). The company being a reliable player in the energy sector, boasts a resilient capital structure, a robust balance sheet and track record of prudent capex management. 

Its strategic discoveries in the Stabroek Block and Permian Basin promise growth and lower greenhouse gas intensity. ExxonMobil prioritizes shareholder returns, evidenced by substantial share buybacks. ExxonMobil’s entry into the lithium market positions it for long-term gains as the demand for lithium is poised to increase with the growing adoption of electric vehicles. 

However, challenges loom, notably in the upstream operations, which are susceptible to volatile oil prices and regulatory hurdles. Increasing societal focus on environmental risks and climate change pose a threat to its traditional oil & gas business. Further, exposure to OPEC production cuts adds to uncertainties.

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

Shares of Salesforce have gained +17.7% over the past year against the Zacks Computer - Software industry’s gain of +30.2%. The company is benefiting from a robust demand environment as customers are undergoing a major digital transformation. Its sustained focus on aligning products with customer needs is driving the top line. Continued deal wins in the international market are another growth driver. 

The buyout of Slack has positioned it as a leader in enterprise team collaboration and improved its competitive standing versus Microsoft Teams. Salesforce’s strategy of continuous expansion of generative AI offerings will help it tap the growing opportunities in the space. 

According to the Zacks analyst estimates Salesforce revenues are expected to witness a CAGR of 8.6% through fiscal 2025-2027. However, stiff competition and unfavorable currency fluctuations are concerns. Softening IT spending amid ongoing macroeconomic uncertainties might hurt its growth prospects.

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

BHP’s shares have declined -3.5% over the past year against the Zacks Mining - Miscellaneous industry’s decline of -5.0%. The company expects iron ore production for fiscal 2025 at 255-265.5 Mt. The midpoint of the range indicates in-line results with fiscal 2024. Its copper guidance of 1,845-2,045 kt indicates 4% growth at the midpoint. Iron ore prices have declined 33% year to date due to weak demand in China. 

Copper prices will also likely be impacted by contraction in the manufacturing sector. While the increase in production might boost BHP’s results, it will be offset by lower prices and higher costs. The Zacks analyst expects a recovery in iron ore prices aided by infrastructure demand in the United States. 

The long-term outlook for copper prices remains positive, supported by demand for electric vehicles. BHP’s investment in projects focused on future-facing commodities and its efforts to improve operational efficiency through technology will also drive growth.

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

Shares of Oil-Dri have outperformed the Zacks Chemical - Diversified industry over the past year (+6.9% vs. -0.5%). This microcap company with market capitalization of $494.38 million has acquired Ultra Pet Company, which strengthens its position in the high-growth crystal cat litter segment and is expected to boost earnings. ODC’s third-quarter fiscal 2024 sales reached $106.8 million, marking 12 consecutive quarters of year-over-year growth.

The company increased its dividend 7% for the 21st consecutive year. Product launches like Cat’s Pride Antibacterial Clumping Litter enhance its competitive edge. Yet, SG&A expenses grew 51% year over year in third-quarter fiscal 2024, reducing operating income 28%. 

Agricultural and animal health product sales fell 24% and 17% year over year, respectively. ODC's heavy reliance on Walmart for a significant portion of its sales makes its revenues vulnerable to volatility. High advertising costs impacted the company's profitability.

(You can read the full research report on Oil-Dri here >>>)

Other noteworthy reports we are featuring today include SAP SE (SAP), Cintas Corp. (CTAS) and The PNC Financial Services Group, Inc. (PNC).

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>>>