Top Research Reports For Visa, United Technologies & United Parcel Service
Zacks Investment Research | Aug 27, 2019 02:13AM ET
Tuesday, August 27, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including Visa (V), United Technologies (UTX) and United Parcel Service (NYSE:UPS). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
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Visa’s shares have outperformed the Zacks Financial Transaction Services industry in the past year, gaining +22.3% vs. a +20.5% increase. The Zacks analyst thinks numerous acquisitions and alliances plus technology upgrades and effective marketing have paved the way for long-term growth and consistent increase in revenues.
The acquisition of Visa Europe is a long-term growth strategy for the company. Its international business has been expanding and adds diversification benefits. The company’s strong capital position facilitates business investments. Its earnings of $1.37 per share beat the Zacks Consensus Estimate by 3.1% and grew 14% year over year, led by growth in payments volume, cross-border volume and processed transactions.
However, high client incentives and expenses weigh on its operating margin. Adverse foreign exchange volatility imparts instability to the company’s earnings.
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Shares of United Technologies have gained +17.9% year to date, outperforming the Zacks Diversified Operations industry, which has increased +10.7% over the same period. The Zacks analyst thinks strength in commercial aftermarket and military businesses coupled with high defense spending in the United States is likely to boost revenues of the company’s aerospace business.
Also, a favorable mix in Otis new equipment orders is likely to be a tailwind for the commercial business. For 2019, United Technologies has revised up earnings view to $7.90-$8.05 per share from the prior guidance of $7.80-$8.00. Notably, the company’s cost reduction and operational excellence initiatives are likely to boost its profitability.
Also, the Rockwell Collins (NYSE:COL) buyout is likely to boost sales in 2019. In addition, a strong cash position and focus on rewarding shareholders handsomely through dividends and share repurchases will work in its favor.
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United Parcel Service’s shares have outperformed the Zacks Transportation - Air Freight and Cargo industry year to date, gaining +17.2% vs. +8.8%. The Zacks analyst likes UPS' efforts to reward its shareholders through dividends and buybacks. In 2018, the company rewarded its shareholders to the tune of $4.2 billion.
Continuing its pro-investor approach, in February 2019, UPS increased its quarterly dividend by 5.5%. Robust free cash flow generation by UPS supports the possibility of a dividend hike going forward. E-commerce growth is an added positive at UPS and has been aiding results for the past few quarters. The trend is likely to continue as UPS anticipates cross-border e-commerce volume to grow by 28% during the 2019-2021 period.
However, UPS' high capital expenditures are worrisome and might hamper bottom-line growth moving ahead. Trade-related uncertainty with China also poses a threat to the company's growth. UPS' high debt equity ratio is also concerning.
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Other noteworthy reports we are featuring today include Exxon Mobil (XOM), Vale (VALE) and Hormel Foods (HRL).
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Note: Our Director of Research 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
Today's Must Read/h6
Featured Reports/h6
Per the Zacks analyst, lower debt levels and focus on improving quality, productivity and lowering costs in the iron ore business will drive growth despite the impact of the Brumadinho disaster.
Per the Zacks analyst, this unit is set to keep gaining on solid pricing and innovation.
BioMarin's impressive rare disease pipeline is progressing well with several data-readouts scheduled this year. Its growing pipeline focus towards gene therapy agents encourages the Zacks analyst.
Per the Zacks analyst, Arch Capital is set to grow on solid Insurance and Reinsurance business.
CBS benefits from an expanding direct-to-consumer business and content portfolio strength despite increasing programming costs.
The Zacks analyst likes Cheniere's competitive advantage of being the first and dominant natural gas exporter in the U.S. market.
Per the Zacks analyst, Plains All American's ongoing investment to expand its existing infrastructure and focus on increasing its midstream assets in the Permian Basin will boost its performance.
Per the Zacks analyst, lower debt levels and focus on improving quality, productivity and lowering costs in the iron ore business will drive growth despite the impact of the Brumadinho disaster.
Per the Zacks analyst, this unit is set to keep gaining on solid pricing and innovation.
BioMarin's impressive rare disease pipeline is progressing well with several data-readouts scheduled this year. Its growing pipeline focus towards gene therapy agents encourages the Zacks analyst.
Per the Zacks analyst, Arch Capital is set to grow on solid Insurance and Reinsurance business.
CBS benefits from an expanding direct-to-consumer business and content portfolio strength despite increasing programming costs.
The Zacks analyst likes Cheniere's competitive advantage of being the first and dominant natural gas exporter in the U.S. market.
Per the Zacks analyst, Plains All American's ongoing investment to expand its existing infrastructure and focus on increasing its midstream assets in the Permian Basin will boost its performance.
New Upgrades/h6
The Zacks analyst believes that world-class discoveries made in Stabroek Block, located off the coast of Guyana, will boost ExxonMobil's crude production.
Per the Zacks analyst, Covanta Holding is investing substantially in infrastructure to increase safety and reliability. The acquisition of Palm Beach should boost its growth.
Per the Zacks analyst, investments in technology upgrade coupled with broadband network infrastructure expansion should bolster Telefonica Brasil's leading position in data and postpaid segments.
The Zacks analyst believes that world-class discoveries made in Stabroek Block, located off the coast of Guyana, will boost ExxonMobil's crude production.
Per the Zacks analyst, Covanta Holding is investing substantially in infrastructure to increase safety and reliability. The acquisition of Palm Beach should boost its growth.
Per the Zacks analyst, investments in technology upgrade coupled with broadband network infrastructure expansion should bolster Telefonica Brasil's leading position in data and postpaid segments.
New Downgrades/h6
Per the Zacks analyst American Water Works' performance could be adversely impacted due to failure of its aging pipeline and additional expenses to comply with stringent regulations.
Per the Zacks analyst, simmering Sino-U.S. tensions related to trade restrictions and tariff war escalations pose significant threat to CommScope's top line as it battles dwindling sales volume.
Per the Zacks analyst, dismal quarterly results along with currency volatility have led to weak projections for 2019.
Per the Zacks analyst American Water Works' performance could be adversely impacted due to failure of its aging pipeline and additional expenses to comply with stringent regulations.
Per the Zacks analyst, simmering Sino-U.S. tensions related to trade restrictions and tariff war escalations pose significant threat to CommScope's top line as it battles dwindling sales volume.
Per the Zacks analyst, dismal quarterly results along with currency volatility have led to weak projections for 2019.
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