December’s nonfarm payrolls increased by 223,000 for the month, above the Dow Jones estimate for 200,000, but marked a decrease from the 256,000 gains in November. Moreover, wage growth was less than expected, and the unemployment rate fell to 3.5%.
While inflation cooled off for the third consecutive month in December, it still remains far beyond the Fed’s 2% target. Fed officials in December projected that the current rate of 4.25%-4.50% range would rise to just over 5% by the end of 2023 and likely remain there for some time.
As a result, the risk of a recession is high. The World Bank recently warned yet again that the global economy would come “perilously close” to a recession this year, led by weaker growth in all the world’s top economies — the United States, Europe, and China.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, and disease control and prevention centers.
On January 10, it was reported that PFE is working with Chinese authorities to send its COVID-19 pill, Paxlovid, to the country dealing with a surge in COVID-19 cases currently. Pfizer has also agreed to export Paxlovid to China through a local company to make the medicine more widely available.
China has also been in talks with the drugmaker to secure a license that will allow domestic drugmakers to manufacture and distribute a generic version of Paxlovid in China, Reuters reported last week, citing sources.
On November 3, PFE’s investigational cancer immunotherapy, elranatamab, received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) for treating people with relapsed or refractory multiple myeloma. This is yet another remarkable milestone in the field of oncology for PFE.
PFE has raised dividends for 12 consecutive years. Its dividend payouts have increased at a 5.7% CAGR over the past five years. Its current dividend yield is 3.46%, and its four-year average yield is 3.63%.
PFE’s United States segment revenues rose 97.3% year-over-year, $13.85 billion, during the third quarter that ended October 2, 2022. Its income from continuing operations grew 5.8% from the year-ago value to $8.65 billion.
The company’s non-GAAP net income increased 39.7% year-over-year to $10.17 billion, while its non-GAAP EPS improved 40.2% year-over-year to $1.78.
Street expects PFE’s revenue for the fiscal year (ended December 2022) to increase 23.5% year-over-year to $100.37 billion. The company’s EPS for the same year is estimated to grow 46.4% year-over-year to $6.47 in the same year. Moreover, the company has surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has declined 13.2% over the past three months to close the last trading session at $47.45.
PFE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE has an A grade for Value and a B for Growth and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #6 out of 166 stocks.
Click here for the additional POWR Ratings for Momentum, Stability, and Sentiment for PFE.
Honda Motor Company, Ltd. (HMC)
Headquartered in Tokyo, Japan, HMC develops, manufactures, and distributes motorcycles, automobiles, power products, and other products in Japan, North America, Europe, Asia, and internationally. Its four segments are Motorcycle Business; Automobile Business; Financial Services Business; and Life Creation and Other Businesses.
On December 8, it was reported that HMC’s Honda Motor (China) Investment Co., Ltd had signed a battery-for-electric-vehicle deal with Contemporary Amperex Technology Co Limited (CATL). As per the contract, Honda would buy 123 GWh of batteries from CATL for use in China’s pure electric vehicles between 2024 and 2030. The battery supply contract will guarantee Honda a long-term supply of batteries amid current supply chain headwinds in the economy.
On October 11, HMC and LG Energy Solution (LGES) announced plans to build a new joint venture battery plant in Fayette County, Ohio, where they intend to invest $3.5 billion and create 2,200 jobs.
The firm aims to invest in a workforce that will provide the power source for future Honda and Acura electric vehicles. It has set a goal of having battery-electric and fuel-cell electric vehicles account for 100% of its vehicle sales by 2040.
Over the last three years, HMC’s dividend payouts have grown at a 6.7% CAGR. While HMC’s four-year average dividend yield is 3.39%, its current dividend translates to a 7.41% yield annually.
HMC’s sales revenue grew 25% year-over-year to ¥4.26 trillion ($32.16 billion) in the second quarter that ended September 30, 2022. Its operating profit increased 16.2% year-over-year to ¥231.20 billion ($1.75 billion). Moreover, its profit rose 13.6% year-over-year to ¥189.20 billion ($1.43 billion).
HMC’s revenue is expected to increase 7.7% year-over-year to $34.39 billion in the fiscal quarter that ended December 2022. The company has also exceeded its consensus revenue estimates in all the trailing four quarters.
Over the past three months, the stock has gained 9% to close the last trading session at $23.89.
It is no surprise that HMC has an overall A rating which equates to a Strong Buy in our POWR Ratings system.
It has an A grade for Value and a B for Quality and Stability. The stock is ranked #6 among the 63 stocks in the Auto & Vehicle Manufacturers industry.
Beyond the grades above, we’ve also rated HMC for Momentum, Sentiment, and Growth. Get all HMC ratings here.
Jabil Inc. (JBL)
JBL offers products and services for manufacturing all over the world. The company operates in two segments: Electronics Manufacturing Services and Diversified Manufacturing Services.
On November 14, 2022, JBL inaugurated a brand-new design facility in Wroclaw, Poland, where it will create cutting-edge solutions for various industries, including healthcare and automotive. With this 10,000-square-foot design center, JBL aims to expand its business in newer markets.
Its annual dividend of $0.32 yields 0.43% on the prevailing price. It has a four-year average dividend yield of 0.78%, and the company has been consecutively paying dividends for the past 16 years.
JBL’s net revenues stood at $9.64 billion for the first quarter ended November 30, 2022, increasing 12.5% year-over-year. Its gross profit increased 10.1% year-over-year to $743 million. Also, its operating income increased 3.4% year-over-year to $362 million.
Analysts expect JBL’s revenue to increase 7.3% year-over-year to $8.10 billion in the current second fiscal quarter ending February 2023. Its EPS is estimated to rise 9.9% year-over-year to $1.85 in the same quarter.
Additionally, the company has an impressive earnings surprise history, as it has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has gained 45% to close the last trading session at $72.19. It has increased 29.6% over the past three months.
JBL’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, equating to a Strong Buy.
It has a B grade for Value, Momentum, Sentiment, and Quality. Within the Technology – Services industry, it is ranked #2 out of 79 stocks.
To see the additional POWR Ratings for Stability, Sentiment, and Momentum for JBL, click here.
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PFE shares were trading at $46.76 per share on Thursday morning, down $0.69 (-1.45%). Year-to-date, PFE has declined -8.74%, versus a 2.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...
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