Tuesday, March 19, 2019
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 Home Depot (HD), Oracle (ORCL) and Union Pacific (UNP). 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 >>>
Home Depot’s shares have gained +11.7% over past three months, underperforming the Zacks Retail Building Products industry’s +13.1% increase. Home Depot boasts a five-year long trend of beating earnings estimates, which continued in fourth-quarter fiscal 2018.
Despite a sales miss in the fiscal fourth quarter, the company has delivered positive sales surprise in eight out of the last 10 quarters. Results gained from strength in both Pro and DIY categories. It also benefited from efforts to provide an interconnected shopping experience to customers, with localized and innovative products, and improved productivity.
The Zacks analyst thinks the Pro segment benefits from efforts to enhance service capabilities, including the new B2B website for the Pros. Moreover, the company outlined a solid view for fiscal 2019 and reaffirmed long-term financial targets.
However, the company has suffered lower-than-expected sales and comps in the fiscal fourth quarter. Tough comparisons, hurricane-related sales gains in the prior year, and unfavorable winter weather hurt comps.
(You can read the full research report on Home Depot here >>>).
Shares of Oracle have outperformed the Zacks Computer Software industry in the past six months, gaining +6% vs. +3.7%. Oracle reported stellar third-quarter results. The Zacks analyst thinks the company is benefiting from strong adoption of its cloud-based solutions, comprising Fusion ERP and Fusion HCM, among others.
Partnerships with the likes of Accenture are helping the company rapidly expand its cloud-base clientele. Also, anticipated strong demand for the next-generation autonomous database supported by machine learning will boost competitive position against Amazon Web Services (AWS).
Nevertheless, stiff competition in the cloud market from dominant players is anticipated to limit margin expansion. Lower hardware volumes are anticipated to hurt top-line growth consequently keeping margins under pressure. Also, integration risks from buyouts remain a concern.
(You can read the full research report on Oracle here >>>).
Buy-ranked Union Pacific’s shares have outperformed the Zacks Rail industry (+1.4% vs. +0.8%) over the past six months. Union Pacific reported better-than-expected earnings per share and revenues in the fourth quarter of 2018. Both the metrics also increased year over year. Higher freight revenues on the back of volume growth aided top-line growth.
For 2019, the company anticipates volumes to increase in the low single-digit range. The Zacks analyst thinks Union Pacific’s efforts to reward its shareholders are encouraging. Notably, the company has hiked dividends four times since November 2017.
Improvement in operating ratio and low tax rates are added positives. Its efforts to promote safety are noteworthy as well. However, high debt levels and operating expenses are concerns. Escalated capital expenditures are contributing to rise in costs.
(You can read the full research report on Union Pacific here >>>).
Other noteworthy reports we are featuring today include Intuitive Baxter (BAX), Dollar General (DG) and Host Hotels (HST).
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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
Focus on Pro Customers to Aid Home Depot's (HD) Top Line
Oracle (ORCL) Gains from Cloud Suite Adoption & Partnerships
Volumes, Dividends & Buybacks Buoy Union Pacific (UNP)
Acquisitions Drive Smucker (SJM), High Expenses a Worry
Per the Zacks analyst, Smucker's Ainsworth buyout is aiding top-line growth, as witnessed in third-quarter fiscal 2019. However, rising SD&A expenses and high interest costs continue to pose threats.
Debt Reductions, Randgold Acquisition Aid Barrick (GOLD)
While Barrick faces challenges from higher production costs, it should gain from its actions to cut debt and synergies of the Randgold buyout, per the Zacks analyst.
Chesapeake (CHK) Banks on Eagle Ford, Drilling Costs High
The addition of profitable Eagle Ford acres from WildHorse Resource acquisition will back Chesapeake's oil production. However, rising drilling costs is a concern, per the Zacks analyst.
Passenger Revenues Aid American Airlines (AAL), Costs Ail
The Zacks analyst likes the increase in passenger revenues on the back of strong demand for air travel.
ITT's (ITT) Motion Technologies Segment to Drive Revenues
Per the Zacks analyst, impressive performance of ITT's Motion Technologies segment, supported by solid automotive friction orders, fueled by strong OEM demand, should continue to drive its sales.
Nektar's (NKTR) Oncology Deals, Pipeline Driving Growth
Per the Zacks analyst, Nektar has collaborations with large pharma companies which provide significant amount in fees and a robust pipeline.
Strategic Acquisitions to Aid Ferrellgas Partners (FGP)
Per the Zacks analyst, wide presence in the United States and strategic acquisitions are likely to boost Ferrellgas Partners' future growth.
Strong Trading Volumes, Balance Sheet Aid MarketAxess (MKTX)
Per the Zacks analyst, international opportunities and a diversified suite of trading products has led to high trading volumes driving revenues. Strong balance sheet aids investment for growth.
Host Hotels (HST) to Grow on Portfolio-Repositioning Efforts
Per the Zacks analyst, Host Hotels is likely to gain from strategic portfolio-repositioning efforts aimed at reducing its international exposure and increasing focus on strategic U.S. markets.
Solid Prospects in Advanced Surgery Unit Aids Baxter (BAX)
Baxter benefits from its Advanced Surgery unit. Baxter's surgical portfolio is expected to rake in huge profits on products like FLOSEAL Hemostatic Matrix, TISSEEL Fibrin Sealant among others.
High SG&A Costs a Concern for Dollar General's (DG) Margins
Per the Zacks analyst, higher SG&A costs due to startup expenses and other investments may hurt margins. Dollar General expects operating margin to remain strained in the first half of fiscal 2019.
Semtech (SMTC) Grapples with Competition, Pricing Pressure
Per the Zacks analyst, competition in the semiconductor space and resultant pricing pressure will continue to weigh on margins and profitability. Also, slowing demand in China could impact results.
Weak Business Solutions Business Weighs On Western Union (WU)
Per the Zacks analyst, revenues at Business Solutions have been under pressure from past many years, weighing on overall revenues.
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Union Pacific Corporation (UNP) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
Dollar General Corporation (DG) : Free Stock Analysis Report
Baxter International Inc. (BAX) : Free Stock Analysis Report
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