Wednesday, June 26, 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 JPMorgan (JPM), Wells Fargo (WFC) and Duke Energy (DUK). 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 >>>
JPMorgan’s shares have gained +8.2% in the past three months, outperforming the Zacks Major Regional Banks industry’s increase of +3.4%. The bank has an impressive earnings surprise history, having surpassed expectations in three of the trailing four quarters.
The Zacks analyst thinks higher rates, improving loan balance, strong balance sheet (indicated by stress test clearance), opening branches in new markets and focus on strengthening credit card business will support the bank's financials. Expanding its reach into lucrative U.S. healthcare payments market with a deal to acquire InstaMed will aid profitability.
However, dismal mortgage banking performance, mainly due to lower origination volume and increase in competition, is expected to continue hampering fee income growth. The company's significant dependence on capital markets revenues makes us wary and is expected to hurt revenue growth to some extent.
(You can read the full research report on JPMorgan here >>>).
Shares of Wells Fargo have underperformed the Zacks Major Regional Banks industry in the past six months, (+1.4% vs. +11.4%). Its earnings surprise history is satisfactory, having beaten the Zacks Consensus Estimate in two of the trailing four quarters.
The Zacks analyst thinks Wells Fargo's restructuring activities and higher interest income, aided by loan growth, remain a tailwind. Further, ongoing investment in the businesses to enhance compliance and risk management capability bodes well. Recently, the company also cleared the Fed’s 2019 stress test.
However, Wells Fargo has been slapped with several sanctions, including a cap on its asset growth by the Fed. This is an outcome of the CFPB's dissatisfaction with the bank’s slow progress on fixing risk-management issues. Rising expenses due to pending litigation issues and hike in personnel costs curb bottom-line expansion.
(You can read the full research report on Wells Fargo here >>>).
Duke Energy’s shares have outperformed the Zacks Electric Power industry in the past year, gaining +13.3% vs +12.4%. The Zacks analyst likes Duke Energy’s strong focus on expanding its scale of operations and implementing modern technologies at the company’s facilities.
Heavy investments are made in infrastructure and expansion projects. The company expects to invest about $37 billion in its overall growth projects during the 2019-2023 period. This investment plan will drive earnings base growth in the company’s combined electric and gas businesses by approximately 6%, over the next five years.
However, massive debt levels can turn out to be a major headwind for the company. Currently, Duke Energy’s strategy includes generation of cleaner energy, due to which it is anticipated to incur environmental compliance cost of $2.78 billion for the 2019-2023 period. Such costs may dampen its bottom-line growth.
(You can read the full research report on Duke Energy here >>>).
Other noteworthy reports we are featuring today include PayPal (PYPL), General Motors (GM) and Norfolk Southern (NSC).
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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
Pick-Up Trucks Drive General Motors (GM) Amid Recall Woes
Per the Zacks analyst, strong sales of 2019 Chevrolet Silverado and GMC Sierra light-duty cabs and their competitive prices are a positive.
Norfolk Southern (NSC) Gains From Cost Cuts Amid Debt Woes
The Zacks analyst likes the improvement in operating ratio as Norfolk Southern aims to check costs. Efforts to reward shareholders are encouraging too.
Dialysis Services Aid DaVita (DVA), Other Business Sluggish
DaVita has consistently gained from strong dialysis services revenues. However, the Zacks analyst is apprehensive about the recent reverses in the company's Other business unit.
Buyouts Boosts A. O. Smith (AOS) Business, High Costs Hurt
Per the Zacks analyst, A. O. Smith stands to gain from synergistic benefits of acquired assets, including Water-Right bought in April 2019.
Grubhub (GRUB) Banks on Growing Partnerships Amid Competition
Per the Zacks analyst, higher active diner base, driven by rising partnerships with Taco Bell and Dunkin Bands, is a tailwind.
TC PipeLines (TCP) to Ride on PNGTS Project Amid Debt Woes
While PNGTS pipeline and brownfield projects like Portland XPress and Westbrook XPress will fuel profits of TC PipeLines, the Zacks analyst is worried about the firm's elevated leverage of 74%.
Patterson (PDCO) Gains from Animal Health Unit, Costs a Woe
Per the Zacks analyst, strong prospects in the core Animal Health unit continue to boost Patterson Companies (NASDAQ:PDCO)' overall performance.
New Upgrades
Casey's (CASY) Value Creation Plan Likely to Propel Sales
Per the Zacks analyst, Casey's remains on track with its value creation plan to lift sales and profitability. This includes new fleet card program, price optimization, and digital engagement program.
Strong Demand for On-Highway Products Aid Allison (ALSN)
Per the Zacks analyst, strong demand for on-highway products from global customers along with price increase of certain products drive Allison's revenues.
Debt Cuts, Action 2020 Initiatives Aid ArcelorMittal (MT)
The Zacks analyst is impressed with the company's efforts to reduce debt. Moreover, costs reduction and high-value products line expansion under its Action 2020 initiative should boost performance.
New Downgrades
PayPal (PYPL) Hurt by Credit Portfolio Sale & Competition
Per the Zacks analyst, the sale of PayPal's U.S. consumer credit receivables portfolio to Synchrony is negatively impacting the top-line growth. Also, rising competition from Square (NYSE:SQ) poses a risk.
Tough Competition, Regulations Hurt Anadarko Petroleum (NYSE:APC)
Per the Zacks analyst, strong competition from major companies, modifications in laws and regulations regarding hydraulic fracturing will hurt Anadarko Petroleum's production and profitability.
Trump's Policy Change on Cuba Travel to Hurt Carnival (NYSE:CCL)
Per the Zacks analyst, policy change on travel to Cuba will have a negative impact on cruise industry and Carnival is no exception. Voyage disruptions related to Carnival Vista is also a concern.
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Wells Fargo & Company (NYSE:WFC): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Norfolk Southern Corporation (NYSE:NSC): Free Stock Analysis Report
JPMorgan Chase & Co. (NYSE:JPM): Free Stock Analysis Report
General Motors Company (NYSE:GM): Free Stock Analysis Report
Duke Energy Corporation (NYSE:DUK): Free Stock Analysis Report
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Zacks Investment Research