Thursday, August 1, 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 Apple (AAPL), BP plc (LON:BP) and Canadian National (CNI). 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 >>>
Apple’s shares have outperformed the broader S&P 500 index on a year-to-date basis (+35% vs. +17.4%). Apple’s third-quarter fiscal 2019 results benefited from continued momentum in the Services segment and improved iPhone sales in China as well as other BRIC nations. Non-iPhone devices performed well, driven by strong demand for iPad and Macbook.
Wearables’ top-line growth was impressive, aided by strong demand for Apple Watch and AirPods. The Zacks analyst thinks the company has a strong slate of upcoming app releases, including its streaming service Apple TV+, which is a key catalyst.
Nevertheless, weakness in iPhone demand along with the uncertainties over the timeframe of the resolution of the U.S.-China trade war do not bode well for the company. Further, antitrust investigations, App Store-related lawsuits and Spotify’s complaint increase legal woes.
(You can read the full research report on Apple here >>>).
Shares of BP have outperformed the Zacks International Integrated Oil industry over the past year (-9.3% vs. -10.3%). The Zacks analyst thinks BP has been gaining from a strong portfolio of upstream projects. Since 2016, BP has placed 22 key upstream developments online, which will help the British energy giant boost production by 900 thousand barrels of oil equivalent per day (MBOE/D) by 2021.
Notably, production from these projects and higher refining marker margin primarily contributed to the company’s better-than-expected earnings in second-quarter 2019. Moreover, the company has a strong commitment to returning cash to shareholders. However, the 2010 oil spill incident in the BP-operated Macondo Prospect is still affecting the firm.
Although BP has cleared the huge litigation expenses related to the spill, it had to divest some of its best operating properties. Also, the integrated energy firm’s balance sheet is more levered than the industry it belongs to.
(You can read the full research report on BP here >>>).
Canadian National’s shares have gained +6.4% over the past year, underperforming the Zacks Rail industry which gained +11.4% over the same period. Canadian National reported better than expected earnings in the second quarter of 2019. Moreover, the bottom line showed a double-digit improvement on a year-over-year basis. The top line also improved year over year.
The TransX buyout and higher freight rates are major factors which aided results. Freight revenues accounting for majority of the top line increased 10% year over year. The Zacks analyst thinks that with this strong freight demand anticipated to continue, the company's adjusted earnings per share projection for 2019 is encouraging. However, lower volumes at Canadian National's forest products segment is a concern.
In fact, the company believes that B.C. mill closures and production curtailments might dampen the segment’s volumes through the rest of 2019. The company's high operating expenses and debt levels add to its woes and may affect results going forward.
(You can read the full research report on Canadian National here >>>).
Other noteworthy reports we are featuring today include Allstate Corp. (ALL), Advanced Micro Devices (NASDAQ:AMD) and Sirius XM (NASDAQ:SIRI).
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Mark Vickery
Senior Editor
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>>>
Today's Must Read
Featured Reports
Premium Growth Buoys Allstate (ALL), Catastrophe Loss Hurts
Per the Zacks analyst, initiatives such as pricing discipline, marketing, distribution, new products and business lines have led to premium growth. But catastrophe losses hurt underwriting margins.
AMD Benefits From GPU Product Rollouts & Partnerships
Per the Zacks analyst, Advanced Micro's release of Radeon RX Vega family of GPUs and alliance with companies like Baidu (NASDAQ:BIDU), Amazon (NASDAQ:AMZN), Tencent, Microsoft (NASDAQ:MSFT) and JD.com will drive the top and bottom line.
Pandora Buyout & Content Strength Benefit Sirius XM (SIRI)
Per the Zacks analyst, Sirius XM Holdings' acquisition of Pandora has strengthened its content slate which is driving subscriber base growth despite tough competition in the music streaming space.
Verisk (NASDAQ:VRSK) Rides on Data Analysis Strength Amid High Debt
The Zacks analyst is impressed with Verisk's expertise in providing predictive data analytics solution by interpreting different types of data sets.
Energizing the Future Plan to Aid FirstEnergy's (NYSE:FE) Growth
Per the Zacks analyst, FirstEnergy's modernization drive and ambitious Energizing the Future plan will add to the company's overall operational strength.
Steady Investments Aid CMS Energy (NYSE:CMS), Regulations Hurts
Per the Zacks analyst, CMS Energy plans to invest $11.2 billion over 2019-2023 on infrastructural upgrades to boost earnings.
Equifax (NYSE:EFX) to Benefit from PayNet Buyout Amid Cost Woes
The Zacks analyst believes that acquisition of PayNet will strengthen Equifax's Commercial business, strengthening its top line.
New Upgrades
Non-Gaming Revenues & China Operations Aid MGM Resorts (MGM)
The Zacks analyst is encouraged by MGM Resorts' revenue growth which is largely derived from its China operations. Non-gaming segment revenues have also been aiding the company.
Growing Top-line & Capital Position Aid CNO Financial (CNO)
Per the Zacks analyst, improving revenues on the back of premium growth and net investment income have aided growth. A favorable balance sheet, which helps in capital management, is another positive.
Sony (SNE) Buoyed by Strong Music & Financial Services Unit
Per the Zacks analyst, Sony is well positioned to drive its business from the consolidation of EMI and increased traction in recorded music, coupled with higher net premiums written at Sony Assurance.
New Downgrades
Continual Rise in Operating Expenses to Hurt M&T Bank (NYSE:MTB)
Per the Zacks analyst, mounting expenses due to M&T Bank's investments in infrastructure and technology remains a major headwind. Exposure to commercial real estate loans are other concerns.
Weak Demand, Currency Weigh on Eastman Chemical (EMN)
Per the Zacks analyst, trade-related issues will continue to hurt demand for Eastman Chemical's specialty products. The company is also exposed to unfavorable currency swings.
Weakness in Organic Sales, Forex Woes to Hurt Graco (GGG)
Per the Zacks analyst, Graco is likely to suffer from uncertain macro conditions and unfavorable movements in foreign currencies. Organic sales projection has been lowered for 2019.
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Sirius XM Holdings Inc. (SIRI): Free Stock Analysis Report
Canadian National Railway Company (CNI): Free Stock Analysis Report
BP p.l.c. (BP): Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
The Allstate Corporation (NYSE:ALL): Free Stock Analysis Report
Apple Inc. (NASDAQ:AAPL): Free Stock Analysis Report
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Zacks Investment Research