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The Zacks Analyst Blog Highlights: Bank of America, PepsiCo, Union Pacific, Caterpillar and Mondelez

Zacks Equity Research
In spite of taking a slew of measures, Signet (SIG) posted weaker-than-expected sales figures for the holiday season, which coincides with the fourth quarter.

 

For Immediate Release

Chicago, IL – January 7, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Bank of America BAC, PepsiCo PEP, Union Pacific UNP, Caterpillar CAT and Mondelez MDLZ.

Here are highlights from Friday’s Analyst Blog:

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

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, PepsiCo and Union Pacific. 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.

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.

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.

Other noteworthy reports we are featuring today include Caterpillar and Mondelez.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
Bank of America Corporation (BAC) : 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
 
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