Wednesday, October 23, 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 SAP SE (SAP), The Goldman Sachs Group, Inc. (GS) and Lockheed Martin Corp. (LMT), as well as two micro-cap stocks AMREP Corp. (AXR) and Nova LifeStyle, Inc. (NVFY). 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 >>>

SAP’s shares have outperformed the Zacks Computer - Software industry over the year-to-date period (+51.7% vs. +14.9%). The company’s third-quarter performance was driven by solid growth across its cloud business, especially rising demand for the "Rise with SAP" and "Grow with SAP" solutions. 

SAP’s cloud revenues rose 25% year over year to €4.35 billion, driven by momentum in the Cloud ERP Suite sales. Amid a volatile macro backdrop, it is making significant strides in Business AI initiatives, with innovations like SAP Knowledge Graph. Synergies from WalkMe’s acquisition and ongoing restructuring efforts bode well.

SAP's strong operating profit and free cash flow in the quarter position it well for growth. Driven by momentum, it raised 2024 outlook. It now expects cloud and software sales in the €29.5-€29.8 billion band, up from the prior view of €29.0-29.5 billion. However, softness in the Software license and support business segment remains something of a hindrance.

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

Shares of Goldman Sachs have gained +24.0% over the past six months against the Zacks Financial - Investment Bank industry’s gain of +53.7%. The company is refocusing on the core strengths of Investment Banking (IB) and trading businesses through restructuring initiatives. Both this and opportunistic buyouts will boost its presence in overseas markets.

Improvement in global deal-making and underwriting activities and its leading position will likely aid IB's revenue growth. A decent liquidity position will aid capital distribution moves. 

Yet its global banking & markets division will likely be under pressure due to the volatile nature of capital markets. Its continuous efforts to narrow focus on the consumer business will likely hurt revenues in the near term. Given the current geopolitical concerns, high dependence on overseas revenues gives caution.

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

Lockheed Martin’s shares have outperformed the Zacks Aerospace - Defense industry over the past year (+34.4% vs. +7.7%). The company’s broad product offerings allow it to secure major defense contracts, which in turn boosts its backlog count. Lockheed remains the largest U.S. defense contractor with a steady order flow from its leveraged presence in the Army, Air Force, Navy and IT programs. 

The solid U.S. defense budgetary provisions should boost its business. Its products also witness a strong international demand from the countries like Germany, Taiwan, Japan and Australia. Meanwhile, the company also holds a strong solvency position.

However, Lockheed is facing performance issues concerning some of its products that may affect its results. Shortage of skilled labor may adversely impact the company’s operating results. The sanctions imposed by China on Lockheed might also affect its business.

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

Shares of AMREP have outperformed the Zacks Real Estate - Development industry over the past year (+74.8% vs. +34.3%). This microcap company with market capitalization of $154.44 million delivered strong first-quarter fiscal 2025 results, with net income up 146.8% year over year to $4.1 million and revenues rising 85.5% year over year to $19.1 million, driven by a 164.3% increase in home sales and a 40.4% rise in land sales year over year. 

Significant growth in home and land sales highlights robust demand and sales execution. The company benefits from its strategic land holdings in New Mexico's growing housing market, supported by favorable market conditions, including price appreciation and moderating mortgage rates. AMREP’s low debt, strong cash position, increasing cash flow and efficient operations, provide flexibility for future growth.

Yet, rising costs, land inventory declines and customer concentration risks could pressure future profitability. Elevated mortgage rates and affordability concerns persist.

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

Nova LifeStyle’s shares have underperformed the Zacks Furniture industry over the past year (-40% vs. +66.6%). This microcap company with market capitalization of $4.07 million is positioned to effectively meet demand, maintaining customer satisfaction and key retail partnerships. Although inventory is slightly down from $2.2 million at 2023-end, the company continues to manage stock levels efficiently, addressing supply chain concerns. 

Despite a 20% drop in sales for the first half of 2024, gross profit rose 4.9%, driven by cost management. The company remains focused on geographic diversity, particularly in North America and Asia. 

Liquidity challenges persist, with only $0.4 million in cash and sales declining 40% year over year in second-quarter 2024. Nasdaq compliance risk, ongoing losses and macroeconomic pressures further cloud near-term growth prospects. Reliance on external financing and declining sales in core regions further pressure the stock

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

Other noteworthy reports we are featuring today include Zoetis Inc. (ZTS), Synopsys, Inc. (SNPS) and Marvell Technology, Inc. (MRVL).
 

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>>>