Wednesday, September 25, 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 Delta Air Lines (NYSE:DAL) (DAL), Newmont Goldcorp (NEM) and FirstEnergy (FE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Delta’s shares have outperformed the Zacks Airline industry in the past six months (18.2% vs. 2.5%). The Zacks analyst thinks that this was mainly due to upbeat passenger revenues backed by robust demand for air travel.
Evidently, passenger revenues, which account for the bulk of the company's top line, increased 7% in the first half of 2019. For the current year, Delta anticipates its top line to grow in the 6-7% band on account of strong passenger revenues. In July, Delta’s board cleared a dividend hike of 15% to 40.25 cents per share.
Initiatives to reduce debts are an added positive. However, rising operating expenses are limiting bottom-line growth. Increase in operating expenses is mainly because of high non-fuel unit costs. Technological glitches and weather-related issues can also hurt profitability.
Shares of Newmont have gained 5.3% in the past three months, underperforming the Zacks Mining - Gold industry’s rise of 16%. The Zacks analyst believes that the company is making notable progress with its growth projects. It is likely to gain from a number of projects including the Tanami Expansion, Subika Underground and Ahafo mill expansion.
The company also remains committed to reduce debt and improve efficiency. Moreover, the merger with Goldcorp is expected to be value-accretive to the company's cash flow and generate significant synergies.
Also, higher gold prices will likely support the company's earnings in 2019. It faces headwinds from high production costs on a year-over-year basis. Lack of growth in the company’s gold reserves is another concern.
FirstEnergy’s shares have gained 29.1% year to date, outperforming the Zacks Utility - Electric Power industry’s rise of 20.7% over the same period. The Zacks analyst believes that its modernization drive and 'Energizing the Future' plan is progressing well.
The company affirmed its long-term compound annual operating earnings growth projection in the range of 6-8% from 2018 through 2021. FirstEnergy plans to invest substantially in its transmission and distribution infrastructure in the 2018-2021 time frame. It is focused on lowering emission levels and has undertaken initiatives for the same.
However, risks of unplanned outages, high debt-capital ratio, unexpected delay in completion of the ongoing capital project and stringent regulatory norms are headwinds. Any delay in the completion of the ongoing capital project will hurt operations and profitability.
Other noteworthy reports we are featuring today include Amazon (AMZN), Fomento Economico Mexicano (FMX) and Amphenol (APH).
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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>>>
Per the Zacks analyst, FEMSA is taking prudent steps to diversify its product portfolio through growth via acquisition strategy.
Per the Zacks analyst American Water Works planned investment of $8-$8.6B from 2019 through 2023 and customer addition via organic and inorganic ways will boost performance.
Per the Zacks analyst, Cboe Global is poised to grow on the back of increasing transaction fees which in turn is driven by higher trading volume.
BioMarin's impressive rare disease pipeline is progressing well with several data-readouts scheduled this year.
While Harley-Davidson's new product line-up including high-tech electrified LiveWire model is likely to boost sales and prospects, the Zacks analyst is worried about the high leverage of 71%.
Per the Zacks analyst, driven by continued rise in loans, Bank OZK's revenues are likely to improve. Given a solid balance sheet, the company is expected to expand through acquisitions as well.
Per a Zacks analyst, iRobot Corporation (IRBT) stands to gain from solid demand for products, like Roomba e5 and i7/i7+ Roomba.
Per the Zacks analyst, Amphenol's top-line benefits from strategic acquisitions as well as end-market strength across military, commercial air, mobile networks and mobile devices.
Per the Zacks analyst, sustained momentum in Invisalign volumes across all geographies and robust worldwide volume growth for teenage patient cases continue to aid Align Technology.
Per the Zacks analyst, F5 Networks is benefiting from strong growth in software, driven by security offerings, such as web application firewall, bot defense and mitigation products.
Per the Zacks analyst, rising transportation and fulfillment center costs due to one-day shipping service are headwinds for Amazon. Also, rising cloud competition from Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL) is a risk.
Lamb Weston expects transportation, input and manufacturing costs to rise in fiscal 2020, wherein it also expects escalated SG&A expenses. Per the Zacks analyst, this is likely to weigh on margins.
The Zacks analyst is concerned over the weak market sentiment and activity decline in Helmerich & Payne's U.S. Land segment, which makes up 90% of its total fleet and around 85% of its revenues.
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