Monday, August 21, 2017
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 Wal-Mart (WMT), Caterpillar (NYSE:CAT) (CAT) and Mondelez (MDLZ). 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 >>>
Wal-Mart’s shares have been strong performers lately, with the stock up +10.6% over the last six months, outperforming the S&P 500's +2.9% gain in the same time period. Walmart’s earnings and revenues exceeded expectations in second-quarter fiscal 2018. The company has also raised the lower end of its fiscal 2018 earnings guidance.
The Zacks analyst likes the company’s efforts to boost sales, focus on building e-Commerce capabilities and forays into new markets through acquisitions. The company has posted positive comps at Walmart U.S. for 12 successive quarters.
Further, the company’s acquisition of four e-Commerce businesses since the Jet.com acquisition is in line with its efforts to grow online activities. However, currency headwinds, decline in international revenues, stiff competition are serious concerns. Huge investments in e-Commerce activities leading to margin pressure is another worry.
(You can read the full research report on Wal-Mart here >>>).
Shares of Strong Buy-rated Caterpillar have gained +22.9% year-to-date, outperforming the Zacks Construction and Mining industry which has increased +20.4% over the same period. Caterpillar reported 12% rise in sales in July, its best performance so far in 2017 thanks to continuing improvement in Asia Pacific and a turnaround performance in Resource Industries. Caterpillar delivered better-than-expected earnings in first-half 2017 driven by cost-control actions.
The Zacks analyst thinks Asia Pacific will continue to be a catalyst for both Resource Industries as well as construction, owing to increased infrastructure and residential investment in China. Also, leading indicators of U.S. construction signal robust conditions ahead that bode well for Caterpillar. Further, efforts to reduce costs will boost margins.
(You can read the full research report on Caterpillar here >>>).
Mondelez shares have been weighed down recently - the stock is down -6.9% vs. -5.1% decline for the Zacks Food Miscellaneous industry in the year-to-date period. Mondelez’s second-quarter 2017 earnings and revenues surpassed expectations. Mondelez’s volume trends have remained weak since 2014 due to volume erosion from higher pricing and category weakness.
Emerging markets’ net revenues decreased 1.5% while developed markets reported revenue decline of 7.1%. Power Brands also witnessed a 3% decline in revenues. Adjusted gross margin decreased 10 basis points or bps as strong net productivity and pricing gains were primarily offset by an unfavorable mix and higher input costs. However, adjusted operating margin increased 90 bps year over year on the back of lower selling, general and administrative costs.
(You can read the full research report on Mondelez here >>>).
Other noteworthy reports we are featuring today include Salesforce (CRM), Estée Lauder (EL) and Deere (DE).
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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
Easing Margin Pressure to Aid BB&T (NYSE:BBT), Risky Loans a Woe
Per the Zacks analyst, the gradual ease in NIM pressure with the improvement in rates should aid BB&T's top-line growth. Yet, significant exposure to risky loan portfolios will hurt its financials.
Deere (DE) Rides on Growing Food Demand Despite Rising Costs
The Zacks analyst expects Deere to gain from solid equipment demand stemming from rise in global grain consumption. But rising cost of sales, and selling and general expenses remain headwinds.
Williams (WPZ) to Grow on Transco Expansion, Debts High
The covering analyst thinks Transco Expansion project will fetch Williams Partners with stable fee-based revenue.
PRASM Growth Buoys Delta (DAL) Amid High Labor Costs
The Zacks analyst appreciates Delta's performance with respect to Passenger revenue per available seat mile (PRASM). The metric's growth is likely to continue. Increased labor costs raise concerns.
Higher Premiums Aid Travelers' (TRV) Earnings, Cat Loss Ails
Per the Zacks analyst, improving premiums will continue to boost Travelers' earnings, thereby resulting in overall growth.
Target's (TGT) Omnichannel & Restock Program to Lift Margins
Per the Zacks analyst, Target's gross margin has been contracting for a while now. However, focus on omnichannel efforts, diversification of assortments and Restock Program should provide cushion.
Estee Lauder's (EL) Dismal Hong Kong Sales Poses Concern
Per the Zacks analyst, buyouts of BECCA and Too Faced have, however, aided top-line growth.
New Upgrades
dd's DISCOUNTS Results Aid Ross Stores' (NASDAQ:ROST) Sales Growth
Per the Zacks analyst, strong sales and operating profits at dd's DISCOUNTS helped boost Ross Stores' sales in second-quarter fiscal 2017. The company expects this trend to continue in future.
Synopsys (SNPS) Rides on Product Launches and Acquisitions
The Zacks analyst believes that Synopsys' sustained focus on introducing products and acquisitions such as Cigital and Codiscope will continue to drive top and bottom line numbers in the long run.
Salesforce (CRM) Rides on Diverse Cloud Products & Buyouts
Salesforce's diverse cloud offerings and strategic acquisitions like Demandware and the resultant synergies are anticipated to prove conducive for growth over the long run, per the Zacks analyst.
New Downgrades
Hormel Foods (NYSE:HRL) Hit by Jennie-O Turkey Store Challenges
The Zacks analyst perceives that weaker turkey prices, stiff rivalry and elevating expenses of Jennie-O Turkey Store segment will dent its near-term top- and bottom-line performances.
Lower Payroll Client Retention Hurts Paychex's (NASDAQ:PAYX) Growth
Per the Zacks analyst, a challenging demand environment, lower client retention and political uncertainty continues to adversely impact Paychex's revenue growth in the near term.
Align's (ALGN) Business Hurt by Strong Dollar, High Expenses
The Zacks analyst believes Align's international dental business will continue to be pressed by a strong dollar. Also increased costs and expenses will dent margins in the coming quarters.
Wal-Mart Stores, Inc. (NYSE:WMT): Free Stock Analysis Report
Mondelez International, Inc. (MDLZ): Free Stock Analysis Report
Estee Lauder Companies, Inc. (The) (NYSE:EL): Free Stock Analysis Report
Deere & Company (NYSE:DE): Free Stock Analysis Report
Salesforce.com Inc (NYSE:CRM): Free Stock Analysis Report
Caterpillar, Inc. (CAT): Free Stock Analysis Report
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