Tuesday, May 15, 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 General Dynamics (GD), Enbridge (ENB) and CSX Corp. (CSX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
General Dynamics ' shares have underperformed the Zacks Aerospace - Defense industry in the last one year (+4% vs. +40.6%). General Dynamics started off 2018 on a mixed note, with its first-quarter earnings surpassing expectations, while its revenues missed the consensus mark. However, results remained impressive on a year-over-year basis.
Meanwhile, the company remains one of the only two contractors in the world equipped to build nuclear-powered submarines and its diverse portfolio of products and services. The Zacks analyst thinks General Dynamics' latest acquisition of CSRA will enable the company to secure more government IT contracts.
However, the company operates in a highly competitive market and has to rely on other companies to provide materials, components and subsystems for its products. The company's dependence on international sales for a major portion of its revenues exposes it to the risk of currency fluctuations and other geo-political risks.
Shares of Enbridge have declined -16.2% over the last one year, underperforming the Zacks Oil Pipeline industry's loss of -10.7% during the same period. Enbridge has the longest and most sophisticated crude and liquids pipeline system in the world that spreads over 17,018 miles.
The Zacks analyst likes the merger with Spectra Energy as it has made Enbridge the largest North American energy infrastructure player. The company's huge backlog of growth projects that stands at roughly C$22 billion along with the C$12 billion worth midstream projects that are online will help it drive dividend by 10% annually through 2020. Enbridge reported strong first-quarter 2018 results, thanks to higher liquid delivery volumes.
But the firm's significant exposure to debt is a matter of concern. We are also worried about the company's year-over-year higher gas distribution costs for first-quarter 2018.
CSX Corporation 's shares have gained +25.5% over the past six months, outperforming the Zacks Rail industry, which has gained +14.3% over the same period. Ushering in further good news, the company reported better-than-expected earnings per share and revenues in the first quarter of 2018. Both metrics also improved year over year.
Apart from lower costs, higher intermodal revenues aided results. Improvement in operating ratio is also a positive. Moreover, the Precision Scheduled Railroading system, implemented by the company's former CEO - E. Hunter Harrison - seems to be paying off. Efforts to reward shareholders are encouraging as well.
However, decline in overall volumes in the quarter is concerning. The automotive unit continued with its dismal performance, thus limiting volume growth. The company's high debt levels represent a further challenge.
Other noteworthy reports we are featuring today include AB InBev (BUD), Humana (HUM) and Vertex (VRTX).
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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
Per the Zacks analyst, Humana is set to grow on strong Medicare Business benefiting from initiatives resulting in favorable prior period medical claims development and lower current-year utilization.
The Zacks analyst believes that expansion of the eligible patient population for its two cystic fibrosis (CF) drugs, Kalydeco & Orkambi, and its new CF drug Symdeko will drive sales growth in 2018.
Per the Zacks analyst, AvalonBay will benefit from its high quality assets, favorable demographics and household formation amid recovering economy and job gains.
Per the Zacks analyst, Hilton's relentless expansion strategy by year-over-year net unit growth is the major topline driver. However, a competitive industry remains a potential headwind.
Per the Zacks analyst, increasing premiums will continue to drive Travelers' bottom line, thereby boosting the company's overall growth.
The Zacks analyst believes that Fiserv's buyout of Dovetail will lead to increased presence in international markets.
The Zacks analyst believes that Waste Management's cost-reduction efforts are helping it to achieve gross margin expansion and EBITDA growth.
As per the Zacks analyst, VIVUS is focused on boosting Qsymia sales and is collaborating with companies for the commercialization of Stendra which provides VIVUS with a steady stream of cash inflow.n
Per the Zacks analyst, productivity initiatives, aggressive cost-cutting and solid segment performance aided by growth in emerging markets and acquisitions bode well for Avery Dennison.
Diversified product offerings, robust scale of operations and sound financials backed by a potent management team continue to drive Ingersoll to improve its operating margins, per the Zacks analyst.
Per the Zacks analyst, soft non-beer volumes due to declines in Brazil and Peru more than offset the growth in own beer volumes, causing total volumes to decline in first-quarter 2018.
Per the Zacks analyst, Walmart's gross margin is expected to remain strained due to growing e-commerce operations, price investments and markdowns. Also, the Flipkart deal is expected to hurt profits.
Per the Zacks analyst, higher acquisition costs as well as growing popularity of Epic Games' Fortnite is hurting Take Two.