Wednesday, October 2, 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 NextEra Energy, Inc. (NEE), Lockheed Martin Corp. (LMT) and Palo Alto Networks, Inc. (PANW), as well as two micro-cap stocks Rave Restaurant Group, Inc. (RAVE) and 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 >>>

NextEra Energy’s shares have outperformed the Zacks Utility - Electric Power industry over the past year (+66.5% vs. +39.4%). The company continues to expand its operations through organic projects and acquisitions. NextEra Energy will add more renewable projects to its portfolio and has nearly 22.6 GW of renewable projects in its backlog. 

Efficient cost management is boosting the company's margins. Florida’s improving economy boosts the company’s subsidiary Florida Power & Light Company’s customer base. NextEra Energy has ample liquidity to meet its short-term debt obligations. 

Yet, due to the nature of NextEra Energy’s business, it is subject to complex rules and regulations. Risks in operating nuclear power-based generation units, unfavorable weather conditions, and increasing supply costs can adversely impact earnings.

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

Shares of Lockheed Martin have outperformed the Zacks Aerospace - Defense industry over the past year (+54.1% vs. +19.9%). 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 >>>)

Palo Alto Networks’ shares have gained +42.2% over the past year against the Zacks Internet - Software industry’s gain of +45.9%. The company has been benefiting from continuous deal wins and the increasing adoption of its next-generation security platforms, attributable to the rise in the hybrid work environment and the heightened need for stronger security. 

PANW’s strong back-to-back quarterly performances reflect its sustained focus on product innovation, a shift in its business model to subscription-based services, platform integration and continued investments in the go-to-market strategy. The normalization of the supply chain is also aiding growth across the Products, Services and Subscription segments. 

However, softening IT spending amid macroeconomic headwinds might hurt its near-term prospects. Forex headwinds and higher marketing and sales expenses are likely to continue hurting its profitability. Also, high acquisition-related expenses are denting margins.

(You can read the full research report on Palo Alto Networks here >>>)

Shares of Rave Restaurant’s have gained +5.9% over the past year against the Zacks Retail - Restaurants industry’s gain of +21.7%. This microcap company with market capitalization of $32.38 million continues to demonstrate strong financial performance, posting its 17th consecutive quarter of positive earnings. Fiscal 2024 net income rose 53.3% to $2.5 million. 

Rave Restaurant’s debt-free balance sheet with $7.8 million in cash reflects financial stability. Its expansion efforts are focused on the Pizza Inn brand, with reimaging initiatives underway for 25% of its buffet restaurants by fiscal 2025 and 21 new domestic sites contracted. 

Despite growth, challenges persist, including declining same-store sales, particularly in the Pie Five brand (which declined 10.6% in fourth-quarter fiscal 2024), rising operating costs and limited unit expansion. Rave Restaurant’s reliance on franchisees, shrinking international presence, modest revenue growth, and geographic concentration further pose risks to sustained growth.

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

AXIL Brands’ shares have underperformed the Zacks Consumer Products - Staples industry over the past year (-65.1% vs. +14.2%). This microcap company with market capitalization of $27.17 million is facing risks which include high reliance on Shopify and Amazon (91% of revenues), rising operating expenses, vendor dependence and limited product diversification (95% of revenues from hearing products). Also, dilution risks from stock issuances and geopolitical factors may impact AXIL's performance.

Nevertheless, AXIL presents a compelling growth opportunity through its expanding market reach across the United States, Canada, the EU and Asia. Partnerships with companies, such as Racing Electronics and Kinsey’s, enhance brand visibility and market penetration, positioning AXIL for revenue growth. 

The company’s focus on innovation in hearing protection and enhancement products, along with its premium Reviv3 Procare hair and skincare line, ensures alignment with evolving consumer demands. AXIL’s revenues grew 17% year over year in fiscal 2024, driven by its hearing products, while maintaining a strong gross margin of 73.4%.

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

Other noteworthy reports we are featuring today include Intercontinental Exchange, Inc. (ICE), Trane Technologies plc (TT) and Colgate-Palmolive Co. (CL).

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>>>