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Top Stock Reports for Bank of America, PepsiCo & Union Pacific

Mark Vickery
Top Stock Reports for Bank of America, PepsiCo & Union Pacific

Friday, January 4, 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 Bank of America (BAC), PepsiCo (PEP) 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 >>>

Bank of America’s shares have outperformed the Zacks Major Regional Banks over the past six months, losing -12% vs. -13.4%. Also, the company possesses an impressive earnings surprise history, beating expectations in each of the trailing four quarters.

Earnings estimates have remained stable ahead of the company's fourth quarter 2018 results. The Zacks analyst thinks rise in loan and deposit balances, higher interest rates, expansion into new markets and efforts to manage expenses are likely to support profitability. Also, lower tax rates and a strong balance sheet position will aid growth.

However, fall in mortgage banking income due to lower volumes and a decline in refinancing activity along with uncertainty related to performance of capital markets remain major concerns. These are expected to hurt the bank's revenues to some extent.

(You can read the full research report on Bank of America here >>>).

Shares of PepsiCo have lost -8.8% in the past year, outperforming the Zacks Soft Beverages industry's decline of -15.2%, due to its robust surprise trend. Earnings topped estimates in the last 11 quarters, while it delivered positive sales surprise in five of the last seven quarters.

The improvement is mainly attributable to strong performances in international divisions, propelled by higher revenue growth in developing and emerging markets. Also, the company’s solid snacks division is boosting the performance.

However, PepsiCo is witnessing strained margins for quite some time due to operating and commodity cost inflation, including higher transportation costs and stepped-up advertising expense. This trend is likely to continue, going ahead.

Additionally, consumers’ awareness on health and wellness, alongside new taxes on sugar-sweetened beverages and growing regulatory pressures are affecting CSD sales, which has caused sluggishness in beverage category.

(You can read the full research report on PepsiCo here >>>).

Union Pacific’s shares have outperformed the Zacks Rail industry (-3.6% vs. -6%) in the past year. The Zacks analyst expects Union Pacific's fourth-quarter 2018 results, scheduled to be unveiled on Jan 24, to be hurt by high operating expenses.

Despite the current downtrend in oil prices, fuel costs are likely to limit bottom-line growth in the fourth quarter. Declining coal volumes might also hurt results. At a presentation in November, the company stated that fourth-quarter volumes in the energy unit had declined 10% as of Nov 25.

Pricing pressures in coal and international intermodal markets are acting as a major headwind. The company's high debt levels are additional concerns. However, the upbeat freight scenario is a positive as Union Pacific derives bulk of its revenues from this source. The company's efforts to reward its shareholders is another cause for optimism.

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

Other noteworthy reports we are featuring today include Texas Instruments (TXN), Caterpillar (CAT) and Mondelez (MDLZ).

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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>>>

Today's Must Read

Branch Expansion, Loans Aid BofA (BAC), Mortgage Fees a Woe


Robust Snacking Category to Drive PepsiCo's (PEP) Sales


Dividends, Buybacks Aid Union Pacific (UNP) Amid Debt Woes


Featured Reports

Texas Instruments (TXN) Banks on Analog Products Amid Risks

Per the Zacks analyst, well-performing power and signal chain product lines in Analog unit are aiding Texas Instruments' top-line growth.

Buoyant Global Demand Aids Caterpillar (CAT) Amid Cost Woes

Per the Zacks analyst, improved demand across most of its end-markets and cost control efforts will drive growth at Caterpillar despite material cost inflation.

Productivity Savings to Continue Fueling Mondelez (MDLZ)

Per the Zacks analyst, productivity savings have been boosting Mondelez's margins, as witnessed in the third quarter.

Midstream Business Aids Phillips 66 (PSX), Debt Burden Ails

The Zacks analyst appreciates Phillips 66's plan to allocate most of its 2019 capital budget for profitable midstream businesses.

International Business Expansion Aids Prudential (PRU)

Per the Zacks analyst, Prudential continues to put in substantial efforts to boost and expand its international operations, thereby resulting in its overall growth.

Fidelity National (FIS) to Benefit from Digital Initiatives

Per Zacks analyst, Fidelity continues to strengthen its position in financial and payments solutions business through investment in mobile banking.

Dividends & Buybacks Aid Delta (DAL) Amid Unit Revenue Woes

The Zacks analyst likes Delta's efforts to reward shareholders. Expansion-related efforts are also commendable.

New Upgrades

Transformation Plan to Aid NRG Energy's (NRG) Balance Sheet

Per the Zacks analyst, asset sales under the Transformation Plan will increase cost savings and will strengthen NRG Energy's balance sheet.

Chemed (CHE) Gains Ground on Strong Roto-Rooter Business

The Zacks analyst is bullish about Roto-Rooter arm seeing consistent growth on strength in the core plumbing and drain cleaning service segments. Solid water restoration business is another positive

Solid Backlog, Communications Business Aid MasTec (MTZ)

Per the Zacks analyst, MasTec is poised to gain from record 18-month backlog of $7.8 billion, fiber deployments and the beginning of 5G rollouts.

New Downgrades

Regeneron's (REGN) Overdependence on Eylea Worrisome

Per the Zacks analyst, Regeneron's key growth driver, Eylea continues to drive sales but the company is highly dependent on the drug. A slowdown in sales due to increasing competition is a concern.

Environmental Risks & Regulations Hurt American Electric (AEP)

Per the Zacks analyst, American Electric's exposure to environmental risks coupled with dependence on regulatory commissions for rate relief at regular intervals are major headwinds.

Rising Costs & Huge Debts Weigh on Nordson (NDSN)

Per a Zacks analyst, Nordson is currently grappling with the adverse impacts of rising costs and operating expenses as well as huge debt levels. Also, forex woes remain an issue.


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Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
 
Pepsico, Inc. (PEP) : Free Stock Analysis Report
 
Mondelez International, Inc. (MDLZ) : Free Stock Analysis Report
 
Caterpillar Inc. (CAT) : Free Stock Analysis Report
 
Bank of America Corporation (BAC) : Free Stock Analysis Report
 
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