Tuesday, January 2, 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 JPMorgan (NYSE:JPM), Texas Instruments (TXN) and McDonald’s (MCD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
JPMorgan’s shares have outperformed the Zacks Major Regional Banks industry over the past six months (up +15.3% vs. +10.8%). This price performance is backed by impressive earnings surprise history, with the company having surpassed expectations in all the trailing four quarters. The Zacks analyst likes the bank’s efforts to control expenses. Combined with the improved rate scenario and rising loan demand, these initiatives should continue to benefit JPMorgan’s financials. Given its solid liquidity position, the company is expected to continue enhancing shareholder value through efficient capital deployment activities. However, the company faces persistent fee income growth challenges, mainly due to slowdown in trading activities and dismal capital markets performance. Also, legal expenses are expected to continue lingering in the near-term.
Shares of Buy rated Texas Instruments have gained +41.9% over the last 12 months, underperforming the Zacks General Semiconductor industry which has gained +46.3% over the same period. However, the Zacks analyst likes Texas Instruments’ prudent R&D investments in several high margin, high-growth areas of the analog and embedded processing markets. This is gradually increasing its exposure to industrial and automotive markets and dollar content at customers, while reducing exposure to volatile consumer/computing markets. Margins continue to expand on secular strength in the auto and industrial markets, a stronger mix of analog and embedded processing products and manufacturing efficiencies that include growing 300-millimeter Analog output. Estimates have been going up ahead of the company's Q4 earnings release. The company has positive record of earnings surprises in recent quarters. However, increasing competition, unfavorable currency effect and a high debt load remain concerns.
Buy rated McDonald's shares have gained +12.8% over the last six months, outperforming the Zacks Restaurants industry which has gained +3.7% over the same period. The Zacks analyst likes the fact that growing guest count remains McDonald’s top priority and that it is undertaking various sales and digital initiatives to this end. Increased focus on delivery, enhancement of digital capabilities, and accelerated deployment of Experience of the Future restaurants in the United States should drive growth too. Efforts to attract customers in International Lead & High Growth Markets also bode well. In fact, global comps at McDonald’s have been positive over the past eight quarters. Meanwhile, augmented focus on refranchising will cut the company’s capital requirements and facilitate EPS growth and ROE expansion in the long run. Yet, high labor costs and currency headwinds might keep profits under pressure. Also, political and economic unrest in some parts of the world and a not so enticing U.S. restaurant space might restrict sales growth.
Other noteworthy reports we are featuring today include BB&T (BBT), Colgate (CL) and Freeport-McMoRan (FCX).
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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, AAR Corp. stands to benefit from the growing aviation services market, which in turn is boosting its profit margin. However, it faces fierce rivalry from other industry players.
The Zacks analyst is impressed by the company's efforts to reward shareholders through dividends & buybacks.
The Zacks analyst believes WEC Energy will gain from its $9.5 to $10B investment plan during 2017-2021, aimed at strengthening its existing infrastructure and initiatives to lower its expenditures.
The Zacks analyst believes that Freeport should gain from its actions to cut mining costs which should lend support to its margins, along with efforts to de-leverage its balance sheet.
Per the Zacks analyst, Kroger's customer 1st strategy and restock program will help drive growth.
Per the Zacks analyst, Colgate is on track with its 2012 Restructuring Program and expects additional opportunities under the program to help reach higher end of its previous cost and savings view.
The Zacks analyst is bullish on solid growth in Revenue Cycle Management (RCM) suite of solutions.
Per the Zacks analyst, TCF Financial's topline will continue to gain from increasing loans balance amid the improving economy. Rising interest rates and focus on digitization will bolster its revenues.
Per the Zacks analyst, rising demand for loans and higher interest rates will likely support Associated Banc-Corp. Further, its inorganic growth strategy is expected to enhance long-term growth.
Per the Zacks analyst, BB&T remains well positioned for top-line improvement given the continued growth in loan balances. Also, given the rise in rates, its margins are expected to improve further.
A massive debt burden of nearly $25 billion coupled with low internally generated cash flow, has made the Zacks analyst turn bearish on Cheniere Energy.
Per the Zacks analyst, Assurant's Global Housing segment continued to be weighed down by lower mortgage originations, decrease in real estate-owned volumes and declining placement rates.
The Zacks analyst is worried about the company's high debt levels. High maintenance costs and a weak rental demand market are other concerns.
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