Top Stock Reports For Bank Of America, PepsiCo & Union Pacific
Zacks Investment Research | Jan 03, 2019 10:37PM ET
Friday, January 4, 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 Bank of America (BAC), PepsiCo (PEP) and Union Pacific (UNP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Bank of America’s shares have outperformed the Zacks Major Regional Banks over the past six months, losing -12% vs. -13.4%. Also, the company possesses an impressive earnings surprise history, beating expectations in each of the trailing four quarters.
Earnings estimates have remained stable ahead of the company's fourth quarter 2018 results. The Zacks analyst thinks rise in loan and deposit balances, higher interest rates, expansion into new markets and efforts to manage expenses are likely to support profitability. Also, lower tax rates and a strong balance sheet position will aid growth.
However, fall in mortgage banking income due to lower volumes and a decline in refinancing activity along with uncertainty related to performance of capital markets remain major concerns. These are expected to hurt the bank's revenues to some extent.
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Shares of PepsiCo have lost -8.8% in the past year, outperforming the Zacks Soft Beverages industry's decline of -15.2%, due to its robust surprise trend. Earnings topped estimates in the last 11 quarters, while it delivered positive sales surprise in five of the last seven quarters.
The improvement is mainly attributable to strong performances in international divisions, propelled by higher revenue growth in developing and emerging markets. Also, the company’s solid snacks division is boosting the performance.
However, PepsiCo is witnessing strained margins for quite some time due to operating and commodity cost inflation, including higher transportation costs and stepped-up advertising expense. This trend is likely to continue, going ahead.
Additionally, consumers’ awareness on health and wellness, alongside new taxes on sugar-sweetened beverages and growing regulatory pressures are affecting CSD sales, which has caused sluggishness in beverage category.
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Union Pacific’s shares have outperformed the Zacks Rail industry (-3.6% vs. -6%) in the past year. The Zacks analyst expects Union Pacific's fourth-quarter 2018 results, scheduled to be unveiled on Jan 24, to be hurt by high operating expenses.
Despite the current downtrend in oil prices, fuel costs are likely to limit bottom-line growth in the fourth quarter. Declining coal volumes might also hurt results. At a presentation in November, the company stated that fourth-quarter volumes in the energy unit had declined 10% as of Nov 25.
Pricing pressures in coal and international intermodal markets are acting as a major headwind. The company's high debt levels are additional concerns. However, the upbeat freight scenario is a positive as Union Pacific derives bulk of its revenues from this source. The company's efforts to reward its shareholders is another cause for optimism.
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Other noteworthy reports we are featuring today include Texas Instruments (TXN), Caterpillar (CAT) and Mondelez (NASDAQ:MDLZ).
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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
Today's Must Read/h6
Featured Reports/h6
Per the Zacks analyst, well-performing power and signal chain product lines in Analog unit are aiding Texas Instruments' top-line growth.
Per the Zacks analyst, improved demand across most of its end-markets and cost control efforts will drive growth at Caterpillar despite material cost inflation.
Per the Zacks analyst, productivity savings have been boosting Mondelez's margins, as witnessed in the third quarter.
The Zacks analyst appreciates Phillips 66's plan to allocate most of its 2019 capital budget for profitable midstream businesses.
Per the Zacks analyst, Prudential continues to put in substantial efforts to boost and expand its international operations, thereby resulting in its overall growth.
Per Zacks analyst, Fidelity continues to strengthen its position in financial and payments solutions business through investment in mobile banking.
The Zacks analyst likes Delta's efforts to reward shareholders. Expansion-related efforts are also commendable.
Per the Zacks analyst, well-performing power and signal chain product lines in Analog unit are aiding Texas Instruments' top-line growth.
Per the Zacks analyst, improved demand across most of its end-markets and cost control efforts will drive growth at Caterpillar despite material cost inflation.
Per the Zacks analyst, productivity savings have been boosting Mondelez's margins, as witnessed in the third quarter.
The Zacks analyst appreciates Phillips 66's plan to allocate most of its 2019 capital budget for profitable midstream businesses.
Per the Zacks analyst, Prudential continues to put in substantial efforts to boost and expand its international operations, thereby resulting in its overall growth.
Per Zacks analyst, Fidelity continues to strengthen its position in financial and payments solutions business through investment in mobile banking.
The Zacks analyst likes Delta's efforts to reward shareholders. Expansion-related efforts are also commendable.
New Upgrades/h6
Per the Zacks analyst, asset sales under the Transformation Plan will increase cost savings and will strengthen NRG Energy's balance sheet.
The Zacks analyst is bullish about Roto-Rooter arm seeing consistent growth on strength in the core plumbing and drain cleaning service segments. Solid water restoration business is another positive
Per the Zacks analyst, MasTec is poised to gain from record 18-month backlog of $7.8 billion, fiber deployments and the beginning of 5G rollouts.
Per the Zacks analyst, asset sales under the Transformation Plan will increase cost savings and will strengthen NRG Energy's balance sheet.
The Zacks analyst is bullish about Roto-Rooter arm seeing consistent growth on strength in the core plumbing and drain cleaning service segments. Solid water restoration business is another positive
Per the Zacks analyst, MasTec is poised to gain from record 18-month backlog of $7.8 billion, fiber deployments and the beginning of 5G rollouts.
New Downgrades/h6
Per the Zacks analyst, Regeneron's key growth driver, Eylea continues to drive sales but the company is highly dependent on the drug. A slowdown in sales due to increasing competition is a concern.
Per the Zacks analyst, American Electric's exposure to environmental risks coupled with dependence on regulatory commissions for rate relief at regular intervals are major headwinds.
Per a Zacks analyst, Nordson is currently grappling with the adverse impacts of rising costs and operating expenses as well as huge debt levels. Also, forex woes remain an issue.
Per the Zacks analyst, Regeneron's key growth driver, Eylea continues to drive sales but the company is highly dependent on the drug. A slowdown in sales due to increasing competition is a concern.
Per the Zacks analyst, American Electric's exposure to environmental risks coupled with dependence on regulatory commissions for rate relief at regular intervals are major headwinds.
Per a Zacks analyst, Nordson is currently grappling with the adverse impacts of rising costs and operating expenses as well as huge debt levels. Also, forex woes remain an issue.
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