Wednesday, April 25, 2018
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 Alphabet (GOOGL), General Electric (GE) and Schlumberger (SLB). 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 >>>
Alphabet’s shares have outperformed the Zacks Internet Services industry in the last year (the stock is up +15% vs. -0.5% decline for the industry). Alphabet delivered strong first-quarter earnings on robust cloud, hardware and Play revenues.
The Zacks analyst likes the company's focus on innovation, AI, cloud, home automation space, strategic acquisitions and Android OS. These factors should continue to generate strong cash flows. Alphabet has shown good execution to date, more or less maintaining its dominant share in a competitive, fast-growing search market. Its diversification strategy is also positive, but requires significant investment and involves uncertain payback periods, particularly since these efforts are at the cutting edge of technology.
However, the company's increased spending on its consumer gadgets, YouTube video app and cloud computing services remain concerns. Also, increasing litigation issues could continue to impact the company’s profits.
(You can read the full research report on Alphabet here >>>).
Shares of General Electric have underperformed the S&P 500 index in the year-to-date period (-15.9% vs. -1.6%). However, General Electric’s first-quarter 2018 earnings trumped expectations by 45.5%. The impressive performance can primarily be attributed to Aviation and Healthcare businesses’ strong operational results. Also, the company’s stringent cost-cutting initiatives drove profits.
Moving ahead, the company is expected to benefit from growth in emerging markets like India and China. Furthermore, General Electric’s strong free cash flow allows it to invest in product innovations, acquisitions and business development, which auger well on a long-term perspective.
However, GE Power has been a significant drag on the company’s margins, due to lower demand of turbines. Earlier, the company had also halved its dividend to 12 cents per share — the first dividend cut since 2009 at the peak of the recession.
(You can read the full research report on General Electric here >>>).
Schlumberger’s shares have underperformed the Zacks Oil and Gas - Field Services industry over the past three months, losing -12.1% vs -8.2%. Schlumberger is the largest oilfield services player in the world with presence in every energy market across the world. The Zacks analyst likes the company’s strong emphasis on returning cash to shareholders through a higher dividend yield than the industry over the last 10 years.
Also, Schlumberger will likely gain from heightened hydraulic fracturing work in the U.S. land market, especially through the second quarter of 2018. The company’s first-quarter 2018 earnings improved year over year, thanks to the rise in North American directional land drilling operations. That said, we are concerned about the escalating project startup costs.
(You can read the full research report on Schlumberger here >>>).
Other noteworthy reports we are featuring today include Constellation Brands (STZ), American Express (AXP) and SAP (SAP).
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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>>>
Today's Must Read
Alphabet (GOOGL) Rides on Diversification; Risks Remain
Strong Aviation Segment Drives General Electric's (GE) Sales
Schlumberger (SLB) to Grow on Onshore Fracking Activity
New Product Offerings to Boost Textron (TXT) Amid Cost Woes
Per the Zacks analyst, Textron continues to make solid progress on new product offerings, which will attract solid orders for the company. Yet, its restructuring plans are pushing up expenses.
Brand Building Boosts Constellation Brands' (STZ) Market Share
Per the Zacks analyst, Constellation Brands' consistent focus on brand building and inclusion of new products are key revenue drivers. This helped it boost market share, mostly in U.S. beer category.
Robust Cloud Growth, Expanding Customer Base Aids SAP (SAP)
Per the Zacks analyst, SAP is benefiting from robust cloud growth, particularly in the EMEA region. Moreover, expanding customer base is a key catalyst.
Strong Customer Card Spending, Lower Taxes Buoy AmEx (AXP)
Per the Zacks analyst, higher card spending due to a strong global economy has led to revenue growth at the company, a reduction in tax rate as a result of the tax reform has aided its margins.
Medical Segment Aids Cardinal Health (CAH), Competition Rife
Solid performance by Cardinal Health's Medical segment is promising. The Zacks analyst is bearish about intense competition in niche space.
Waters (WAT) Banks on End-Market Performance, Risks Remain
Per the Zacks analyst, strong end-market performance and well-performing TA product line will continue to boost the top-line growth.
Buyouts, Solid Housing Market to Aid Universal Forest (UFPI)
Per a Zacks analyst, Universal Forest Products stands to gain from rise in housing starts and demand for repair and remodeling activities in the United States.
Higher Rates, Cost Cutting Moves Aid Regions Financial (RF)
Per the Zacks analyst, Regions' top line should continue to benefit from higher rates along with rising loans and deposits. Also, cost-saving initiatives are expected to support profitability.
Loan Growth, Easing Margins Aid Webster Financial (WBS)
Per the Zacks analyst, Webster Financial's organic strength is reflected by rising loans and deposits balances. Also, easing margin pressure on rising rates is likely to support top line growth.
Higher Steel Demand, Debt Cuts to Aid Cleveland-Cliffs (CLF)
Per the Zacks analyst, Cleveland-Cliffs should gain from efforts to de-leverage its balance sheet and higher steel demand in the United States across key markets including construction and automotive.
Norwegian Cruise Line (NCLH) Hurt by High Operating Expenses
The Zacks analyst is concerned about the company's bottom line being hurt by the rise in cruise operating expenses. Rise in fuel costs are primarily responsible for pushing up total expenses.
High Debt and SG&A Expenses Weigh on Genuine Parts (GPC)
Per the Zacks analyst, rising cost of labor and planned IT investments is adding to Genuine Parts' SG&A expenses. Also, huge debt taken to fund AAG's acquisition is straining its profit margins.
High Costs, Concentration Risk Hurts Federated (FII)
Per the Zacks analyst, consistently rising expenses due to strict compliance measures hurts Federated's financials. Also, investment advisory fees as a key source of revenue remains a concern.
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Constellation Brands Inc (STZ) : Free Stock Analysis Report
Schlumberger Limited (SLB) : Free Stock Analysis Report
SAP SE (SAP) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
General Electric Company (GE) : Free Stock Analysis Report
American Express Company (AXP) : Free Stock Analysis Report
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