Thursday, October 10, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Berkshire Hathaway Inc. (BRK.B), Canadian Pacific Kansas City Ltd. (CP) and American International Group, Inc. (AIG), as well as micro-cap stock Steel Partners Holdings L.P. (SPLP). 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 outperformed the Zacks Insurance - Property and Casualty industry over the year-to-date period (+27.8% vs. +26.7%). 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 Canadian Pacific have outperformed the Zacks Transportation - Rail industry over the year-to-date period (+2.3% vs. -1.4%). Following the approval of the merger with Kansas City Southern, the company is known as Canadian Pacific Kansas City Ltd. The deal is anticipated to draw synergies (annually) of $1 billion within three years.

The merged entity has started to offer a daily premium intermodal service between the U.S. Midwest and Mexico. We are impressed with Canadian Pacific Kansas City's efforts to reward its shareholders through dividends and share repurchases.

On the flip side, high operating expenses continue to weigh on the company's bottom line. The positivity surrounding the stock is evident from the fact that the Zacks Consensus Estimate for current-year earnings has been revised upward over the past 60 days. In view of the positives surrounding the stock, investors would do well to bet on the same at current levels.

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

American International’s shares have gained +13.3% over the year-to-date period against the Zacks Insurance - Multi line industry’s gain of +20.4%. The company’s cost-cutting efforts are driving operational efficiency, aiding the margins. It continues to make divestitures to streamline its operations, focus on the General Insurance unit and reduce portfolio volatility.

American International’s robust cash generation abilities have enabled it to continue elevating shareholder value through share buybacks and dividend payouts. Its FCF increased 5.4% in the trailing 12-month period.

However, deterioration in its North America Commercial Lines’ combined ratio is a headwind. Its net debt-to-capital is higher than the industry. Moreover, its ROE of 9.52% is lower than the industry’s average of 16.09%, reflecting inefficiency in utilizing shareholders’ funds. As such, the stock warrants a cautious stance.

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

Shares of Steel Partners’ have gained +4.1% over the past six months against the Zacks Diversified Operations industry’s gain of +15.2%. This microcap company with market capitalization of $808.39 million reported strong financial results in second-quarter 2024, with revenues growing 6.4% year over year to $533.2 million and a 113.2% surge in net income to $124.9 million.

Revenues for the six months ended Jun 30, 2024 also increased by 6.7% to $1 billion. This growth reflects the company's effective diversification across its industrial and financial services segments. SPLP's operational efficiency is highlighted by a 15.7% adjusted EBITDA margin, up from 14.7% in second-quarter 2023.

The company's balance sheet is robust, with $256.4 million in cash and a $112-million debt reduction in the first half of 2024, enhancing financial stability. Investments in the Supply Chain segment, which saw 192% in revenues for the six months ended Jun 30, 2024, position SPLP for long-term growth, particularly as global supply chains evolve.

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

Other noteworthy reports we are featuring today include Palo Alto Networks, Inc. (PANW), Halliburton Co. (HAL) and Wheaton Precious Metals Corp. (WPM).

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>>>