Wednesday, July 31, 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 Toyota Motor Corp. (TM), Lockheed Martin Corp. (LMT) and Chubb Ltd. (CB), as well as a micro-cap stock Pro-Dex, Inc. (PDEX). 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 >>>

Toyota Motor’s shares have outperformed the Zacks Automotive - Foreign industry over the past year (+12.4% vs. -11.1%). The company’s robust lineup of trucks and sport utility vehicles is set to fuel sales. To capitalize on the global shift to environment-friendly vehicles, the auto giant is deepening its focus on manufacturing electric and hydrogen fuel-cell vehicles, which will bolster the company’s product competitiveness.

Toyota Motor aims to expand global sales of BEVs to 1.5 million units in 2026 and 3.5 million units a year by 2030. Toyota’s commitment to maximize shareholders value via dividends and buyback is also praiseworthy.

However, labor cost inflation is expected to continue to weigh on margins. Rising debt levels, along with high R&D expenses and capex, are set to play spoilsport. Also, Toyota expects sales in Japan to decrease, given the lower shipments of Daihatsu. Thus, the stock warrants a cautious stance now.

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

Shares of Lockheed Martin have outperformed the Zacks Aerospace - Defense industry over the past year (+19.1% vs. -4.4%). The company ended second-quarter 2024 on a solid note, with both its earnings and revenues surpassing their respective Zacks Consensus Estimate. Its 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.

However, Lockheed is facing performance issues concerning some of its products that may affect its results. Shortage of skilled labor may adversely impact Lockheed’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 >>>)

Chubb’s shares have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+36.2% vs. +25.2%). The company’s suite of compelling products as well as services, focus on capitalizing on the potential of middle-market businesses and investments in various strategic initiatives pave the way for long-term growth.

Several distribution agreements have expanded its network, boosting its market presence. An impressive inorganic growth story helps to achieve a higher long-term return on equity. Chubb expects adjusted net investment income to be in the range of $1.57 billion to $1.63 billion per quarter in 2024.

Chubb boasts a strong capital position with sufficient cash generation capabilities that ensure steady payouts to investors. Second quarter EPS beat estimates. However, exposure to catastrophe loss induces underwriting volatility. Escalating expenses weigh on margin expansion.

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

Shares of Pro-Dex have outperformed the Zacks Medical - Dental Supplies industry over the past year (+12.9% vs. -1.7%). This microcap company with market capitalization of $69.48 million has demonstrated strong financial performance, with net sales increasing 10% year over year to $38.8 million for the nine months ended Mar 31, 2024, reflecting robust demand.

The acquisition of a new 25,000 sq. ft. manufacturing facility in Tustin, CA, boosts production capacity and supports future growth. Strategic alliances, such as a supply agreement with Monogram Orthopaedics, enhance market reach and revenue potential. Pro-Dex's strong balance sheet, with $3.2 million in cash and $5.2 million in operating cash flow, ensures financial stability.

Strong customer relationships, with repeat business from major customers accounting for 85% of net sales, provide a stable revenue stream. However, customer concentration risk, limited market diversification, high operating expenses and competitive pressures are notable headwinds.

(You can read the full research report on Pro-Dex here >>>)

Other noteworthy reports we are featuring today include Honeywell International (HON), American Electric Power (AEP) and The Hartford Financial Services Group (HIG).

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>>>