Wednesday, October 24, 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 Procter & Gamble (PG), Philip Morris (PM) and Honeywell (HON). 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 >>>
Procter & Gamble 's shares have declined -5.1% year to date, underperforming the Zacks Soap and Cleaning Materials industry, which lost -4.7% over the same period. The Zacks analyst attributes the underperformance to strained margins, which in turn have been caused by increased commodity and shipping costs, adverse currency, higher business investments and aggressive pricing from private-label products amid intense competition.
Moreover, sales remain muted due to weak demand and lower prices. While the company expects recently announced price increases to help rebound sales and margins, analysts' fear of impacts on demand and consumption. Also, softness in the grooming and baby care businesses remains concerns.
However, the company has an impressive earnings surprise history, which continued in fourth-quarter fiscal 2018 marking its 13th consecutive beat. The company's focus on product improvement, packaging and marketing initiatives, and productivity cost-savings plan bodes well. Further, it is benefiting from higher demand for skincare products, along with fabric and home care products.
(You can read the full research report on Procter & Gamble here >>> ).
Shares of Philip Morris have outperformed the Zacks Tobacco industry over the past three months (+5.6% vs. +0.2%) buoyed by sturdy top- and bottom-line performances as well as a positive view for 2018. In fact, the third-quarter 2018 results mark fifth and sixth straight quarter of year-on-year earnings and revenue growth, respectively. Results also surpassed estimates in the period.
The quarter's robust performance was backed by favorable pricing and strong brand performances in the combustible category. Further, the company is undertaking initiatives to strengthen RRPs, which have been gaining market popularity.
However, Philip Morris has been grappling with persistent declines in total shipment volumes, mainly stemming from weak cigarette sales. Stringent government regulations on tobacco products have been marring cigarette industry volumes for a while. Moreover, unfavorable currency movements are a viable threat.
(You can read the full research report on Philip Morris here >>> ).
Honeywell 's shares have outperformed the Zacks Diversified Operations industry over the past six months, increasing +2.4% vs. a -1.6% decline. In third-quarter 2018, the company's earnings grew 16.7% year over year and also exceeded expectations by 2%.
The company believes that solid demand for innovative technology solutions will continue to drive its segmental revenues in the quarters ahead. The Zacks analyst thinks stronger sales volumes, increased productivity and ongoing commercial effectiveness actions will likely boost near-term profitability.
However, the stock looks overvalued compared to the industry for the past six-month period. The company is presently facing inflationary headwinds across its entire supply-chain process. Escalating costs might dent Honeywell's profitability in the quarters ahead.
(You can read the full research report on Honeywell here >>> ).
Other noteworthy reports we are featuring today include Lockheed Martin (LMT), Chubb (CB) and Illumina (ILMN).
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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 Trendsand Earnings Previewreports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
P&G's (PG) Productivity & Cost Savings Plan to Aid Margins
High Cigarette Pricing to Boost Philip Morris (PM)
Strong Aerospace Segment Drives Honeywell's (HON) Revenues
DTC Seasonality Continues to Impede Illumina's (ILMN) Growth
The Zacks analyst is concerned about the seasonal nature of DTC (direct-to-consumer) functionality which may continue to hamper Illumina's microarray sales. Funding issues restrict growth.
Loan Growth, Easing Margins Aid Webster Financial (WBS)
Per the Zacks analyst, Webster Financial's organic strength is reflected by rising loans and deposits balances.
Crane (CR) Gains From Ongoing Pricing Actions Amid Cost Woes
The Zacks analyst thinks stronger sales volumes, ongoing pricing actions and lower taxes will continue to bolster Crane's near-term profits.
Downstream Expansion Aids Huntsman (HUN), Input Costs A Woe
Per the Zacks analyst, Huntsman should gain from its actions to grow its downstream specialty and formulation businesses.
Unit Revenue Growth Buoys Spirit (SAVE) Amid High Fuel Costs
The Zacks analyst likes the company's performance with respect to unit revenues. However, high fuel costs are limiting bottom-line growth.
Rising Loans Aid TCF Financial (TCF), Declining Fees a Woe
Per Zacks analyst, TCF Financial's topline continues to gain from increasing loans balance amid the improving economy.
Restructuring, Global M&A Deals Aid Moelis & Company (MC)
Per the Zacks analyst, Moelis & Company's geographical expansion efforts, solid mergers and acquisitions across the world will likely aid revenue growth.
Solid Contract Wins, Favorable Budget to Aid Lockheed (LMT)
Per the Zacks analyst, solid order inflows from Pentagon and overseas are boosting Lockheed's top line. Recent budgetary amendments will also bolster its position in the defense space.
PHP Project to Propel Kinder Morgan's (KMI) Fee-Based Growth
The Zacks analyst believes that Kinder Morgan's proposed Permian Highway Pipeline Project will help the company to cash in on the region???s bottlenecks and improve cash flow visibility.
Loan Growth, Business Simplifying Plan Support Zions (ZION)
Per the Zacks analyst, loan growth, higher interest rates, solid asset quality, business restructuring efforts and exemption from strict regulations will aid Zions' profitability.
Cat Loss Exposure, High Expenses Weigh on Chubb (CB)
Per the Zacks analyst, Chubb's exposure to catastrophic events induces volatility to its underwriting profitability. Also, escalating expenses weigh on desired margin expansion.
Higher Investments & Integration Risks Impact SAP's Margins
Per the Zacks analyst, SAP's margins are likely to be under pressure due to higher investments in a bid to enhance cloud-based offerings. Further, Calidus Software buyout limits margin expansion.
Rising Lumber & Labor Costs Weigh on PulteGroup's (PHM) Margins
Rising lumber and labor costs are likely to impact fourth-quarter gross margin and pose significant risk, per the Zacks analyst.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportPhilip Morris International Inc. (PM): Free Stock Analysis ReportProcter & Gamble Company (The) (PG): Free Stock Analysis ReportLockheed Martin Corporation (LMT): Free Stock Analysis ReportIllumina, Inc. (ILMN): Free Stock Analysis ReportHoneywell International Inc. (HON): Free Stock Analysis ReportChubb Limited (CB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research