Friday, May 17, 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 Walmart (WMT), American Tower (AMT) and U.S. Bancorp (USB). 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 >>>
Walmart’s shares have outperformed the Zacks Supermarkets industry in the past year (+20.1% vs. +18.9%), backed by focus on strengthening e-commerce and store operations. The Zacks analyst thinks these factors aided the company retain sturdy comps trend in first-quarter fiscal 2019, wherein earnings marked its fifth straight beat.
Further, U.S. comps rose for the 19th straight time. E-commerce sales surged on robust Walmart.com and online grocery performances. Encouragingly, e-commerce sales are expected to rise nearly 35% in fiscal 2020. The company is also making efforts to improve its International unit by shifting focus to profitable countries.
However, the addition of Flipkart was a drag on Walmart’s operating income. Moreover, transportation costs, compelling pricing strategy and tariff-related worries are threats to margins. Nonetheless, the Flipkart deal bodes well for the long term.
(You can read the full research report on Walmart here >>>).
Shares of American Tower have outperformed the Zacks REIT and Equity Trust industry in the past three months (+13% vs. +4.4%). The company’s first-quarter 2019 results were marred by year-over-year decline in revenues from the service segment and lower cash from operations.
However, the Zacks analyst thinks higher use of mobile data is fueling demand for space on the company’s telecom towers. This is expected to enable American Tower to experience splendid leasing activity and organic tenant billings growth in the upcoming quarters. With higher investments in 4G and the upcoming 5G technology, wireless carriers will densify their respective network.
Hence, the company is strengthening its portfolio and focusing on innovation to capture underlying opportunities. Yet, it has a substantially leveraged balance sheet. However, the accelerated Indian carrier consolidation-driven churn and high customer concentration are risks.
(You can read the full research report on American Tower here >>>).
U.S. Bancorp’s shares have underperformed the Zacks Major Banks industry over the past six months, losing -6.7% vs -3%. Yet, the company possesses an impressive earnings surprise history, having beaten expectations in three of the trailing four quarters.
First-quarter results reflect top-line strength and higher loans, partially offset by elevated expenses. The Zacks analyst thinks U.S. Bancorp will likely get support from its solid business model, core franchise, lower tax rate, higher interest rates and diverse revenue streams.
Also, its capital deployment activities continue to enhance shareholder value. However, escalating expenses due to ongoing investments in technology and likely increase in legal expenses remain concerns. Also, significant exposure to commercial loans remains a headwind.
(You can read the full research report on U.S. Bancorp here >>>).
Other noteworthy reports we are featuring today include Humana (HUM), Sempra Energy (SRE) and Royal Caribbean (RCL).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
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
E-commerce Sales to Fuel Walmart (WMT), Soft Margins a Woe
Steady Demand Buoys American Tower (AMT), Debt Woes Linger
Loan Growth Supports U.S. Bancorp (USB), Higher Costs a Woe
Investments Aids Sempra Energy (SRE), Operational Risks Hurt
Per the Zacks analyst, company's disciplined investments in various projects bolsters growth prospects. However, it is subject to operational risks associated with breakdown or failure of equipment.
Business Streamlining, Strong Medicare Aid Humana (HUM)
Per the Zacks analyst, a number of acquisitions and dispositions have led to focus on core growth areas thereby generating growth. Strong and growing Medicare business have led to revenue growth.
Royal Caribbean's (RCL) Booking Trends Offset Cost Concerns
The Zacks analyst believes that Royal Caribbean's solid booking trends and increased demand is contributing significantly toward improving revenue yields amid increasing operating costs.
Pioneer Natural (PXD) Banks on Oil-Rich Permian Acreage
The Zacks analyst agrees that a huge inventory of drilling locations in the prolific Permian basin will help Pioneer Natural ramp up oil production.
Buyout Aids Parker-Hannifin (PH), High Costs Worrying
Per the Zacks analyst, Parker-Hannifin's revamped "Win Strategy" along with the CLARCOR buyout should boost its growth prospects.
AMETEK (AME) Rides on Acquisition Benefits & Organic Growth
Per the Zacks analyst, Forza, Motec, Tellular, Spectro Scientific and Soundcom buyouts are aiding AMETEK's Electronic Instruments unit.
Diamondback (FANG) to Gain from Energen & Ajax Acquisitions
The Zacks analyst believes Diamondback's twin buys of Energen Corp and Ajax Resources should bolster its Permian hold.
Restructuring, Acquisitions to Aid PPG Industries (PPG)
According to the Zacks analyst, cost savings from restructuring actions should support PPG Industries' margins in 2019. Acquisitions should also contribute to its sales.
Strategic Initiatives Aid Hartford Financial (HIG)
Per the Zacks analyst, the company has been vending non-core businesses to focus on core areas and enhance its operating leverage. Efforts to expand business through buyouts have also led to growth.
Amdocs (DOX) Rides On Strong Product Portfolio, Client Wins
Per the Zacks analyst, Amdocs is benefiting from rising adoption of its solutions like DigitalONE. Increase in communications, Pay TV and media customers backed by digital modernization is a tailwind.
Narrowing Crude Discounts Weigh on Marathon (MPC)
The Zacks analyst believes the narrowing discounts for medium and heavy sour crude grades weakened the company's refining profitability. Weak gasoline margin is also a concern.
Tegna (TGNA) Suffers on Loss of Political, Olympic Revenues
Per the Zacks analyst, lack of political, Olympic and Super Bowl revenues resulted in a decline Tegna's total revenues. Moreover, increasing expenses are expected to hurt profits in the near term.
High Debt Levels, Weak Volumes to Weigh on Greif (GEF)
The Zacks analyst is concerned that higher debt following the Caraustar acquisition and continued weak volumes in the Rigid Industrial Packaging & Services segment will impair Greif's results.
Walmart Inc. (WMT) : Free Stock Analysis Report
U.S. Bancorp (USB) : Free Stock Analysis Report
Sempra Energy (SRE) : Free Stock Analysis Report
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Humana Inc. (HUM) : Free Stock Analysis Report
American Tower Corporation (REIT) (AMT) : Free Stock Analysis Report
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