Top Stock Reports For JPMorgan, Coca-Cola, Comcast & United Technologies
Zacks Investment Research | Apr 25, 2018 11:29PM ET
Thursday, April 26, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 17 major stocks, including JPMorgan (JPM), Coca-Cola (KO), Comcast (CMCSA) and United Technologies (UTX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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JPMorgan’s shares have outperformed the Zacks Major Regional Banks industry over the past six months (up +8.1% vs. +3%). This price performance is backed by impressive earnings surprise history, with the company surpassing the Zacks Consensus Estimate in each of the trailing four quarters. Its first-quarter 2018 results reflect improved revenues and lower credit cost.
The bank’s efforts to expand into new markets, higher interest rates and rising loan demand will likely continue to benefit its financials. Also, lower tax rates will aid profitability in the quarters ahead. However, fee income growth challenges (mainly due to a slowdown in capital market activities and dismal mortgage banking performance) remains a major concern for the company. Also, litigation hassles are a major concern.
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Shares of Coca-Cola have outperformed the Zacks Soft Drinks Beverages industry in the last year, (-1.4% vs. -2%). Coca-Cola started 2018 on a solid note, beating expectations on both counts in the first quarter. Apart from a notably rise in soda volumes, it gained from its growing beverage portfolio and restructuring efforts.
Organic sales grew 5%, led by price/mix growth of 1% and concentrate sales growth of 4%. Currency also had a 2% positive impact on revenues. Again, lower SG&A expenses (down 24.2%), higher gross margin (up 270 bps) and higher operating margin (up 600 bps) helped it come up with better earnings (up 8%). However, total sales decreased 16%, marking the 12th consecutive quarterly decline in revenues.
Although the top line has yet to show sustained improvement, the Zacks analyst likes the strategic efforts to make its portfolio that of a total beverage company with improved marketing and innovation, focus on driving revenues by improved price/mix, digital focus and productivity initiatives toward driving margins.
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Comcast’s shares have underperformed the Zacks Cable Television industry in the last three months, losing -18.4% vs. -16.3%. However, Comcast’s first-quarter results benefited from increasing number of high speed internet subscribers and incremental revenues from the broadcasting of Winter Olympics and Super Bowl.
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The company expects to continue investments on Theme Parks, which also reported impressive top-line growth in the quarter. Comcast submitted a firm bid for Sky Communications. The acquisition is likely to provide synergies worth $500 million.
Meanwhile, the Zacks analyst thinks the nationwide rollout of the DOCSIS 3.1 technology and the completion of the nationwide rollout of Comcast’s wireless services under the Xfinity Mobile brand will boost subscriber base going forward. Moreover, partnerships with the likes of Charter and Netflix (NASDAQ:NFLX) are positives.
However, the company continues to lose voice and video subscribers due to cord-cutting and stiff competition. Additionally, high debt level is a headwind.
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Shares of United Technologies have gained +2% in the last six months, outperforming the Zacks Diversified Operations industry, which has lost -11.7% over the same period. United Technologies’ first-quarter 2018 earnings trumped expectations and rose 19.6% year over year.
The Zacks analyst thinks the impressive growth can be attributed to solid performances across the segments. Also, the company issued a bullish guidance for 2018 on healthy demand trends and is likely to deliver sustainable earnings growth in future with the Rockwell merger.
Meanwhile, United Technologies remains focused on four key priorities: flawless execution, innovation, structural cost reduction and disciplined capital allocation to fuel its growth engine. However, fluctuations in foreign currency exchange rates may affect the company’s bottom-line growth.
In addition, a disruption in deliveries from suppliers, capacity constraints, production disruptions, price changes or decreased availability of raw materials or commodities is likely to have an adverse effect on the company’s ability to meet delivery schedules.
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Other noteworthy reports we are featuring today include Sherwin-Williams (SHW), Twitter (TWTR) and Corning (GLW).
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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
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Featured Reports/h6
Per the Zacks analyst, Ameriprise is well poised for top-line growth given its strategic restructuring efforts and a well-diversified portfolio.
The Zacks analyst stresses that the acquisition of NES Rentals expands United Rentals' geographic footprint in key markets while the Neff buyout enhances the company's earthmoving equipment business.
Per the Zacks analyst, despite witnessing consistent revenue growth on the back of rising interest income, Synchrony Financial's bottom line suffers from increasing operating costs.
While Sherwin-Williams should gain from synergies of the Valspar acquisition, hefty costs related to the buyout will weigh on its FY18 earnings, per the Zacks analyst.
The Zacks analyst believes that Nucor's commitment to expand its production capabilities should drive growth.
Per the Zacks analyst, Twitter's expansion in the Asia Pacific market, mainly Japan, is a key driver.
Per the Zacks analyst, although Centene's revenue gains from accretive acquisitions, the rising level of debt that results in increasing borrowing costs, hurt the margins.
Per the Zacks analyst, Ameriprise is well poised for top-line growth given its strategic restructuring efforts and a well-diversified portfolio.
The Zacks analyst stresses that the acquisition of NES Rentals expands United Rentals' geographic footprint in key markets while the Neff buyout enhances the company's earthmoving equipment business.
Per the Zacks analyst, despite witnessing consistent revenue growth on the back of rising interest income, Synchrony Financial's bottom line suffers from increasing operating costs.
While Sherwin-Williams should gain from synergies of the Valspar acquisition, hefty costs related to the buyout will weigh on its FY18 earnings, per the Zacks analyst.
The Zacks analyst believes that Nucor's commitment to expand its production capabilities should drive growth.
Per the Zacks analyst, Twitter's expansion in the Asia Pacific market, mainly Japan, is a key driver.
Per the Zacks analyst, although Centene's revenue gains from accretive acquisitions, the rising level of debt that results in increasing borrowing costs, hurt the margins.
New Upgrades/h6
Per the Zacks analyst, Sallie Mae's efforts to enhance loan portfolios are impressive. It receives further support from improving economy. Notably, it expects originations of about $5 million in 2018.
The Zacks analyst believes that Robert Half's initiatives involving enterprise resource planning and cloud-based customer relationship management applications offers significant growth opportunities.
Per the Zacks analyst, Corning is benefiting from sequential decline in LCD glass prices and contract wins in the automotive market.
Per the Zacks analyst, Sallie Mae's efforts to enhance loan portfolios are impressive. It receives further support from improving economy. Notably, it expects originations of about $5 million in 2018.
The Zacks analyst believes that Robert Half's initiatives involving enterprise resource planning and cloud-based customer relationship management applications offers significant growth opportunities.
Per the Zacks analyst, Corning is benefiting from sequential decline in LCD glass prices and contract wins in the automotive market.
New Downgrades/h6
Per the Zacks analyst, Kimberly-Clark's first quarter profit was largely hurt by higher pulp and other raw material costs. This led to a raised input cost inflation view of $400-$550 million for 2018.
The Zacks analyst believes that the surge in long-term debt and negative free cashflow are hurting Enbridge's ability to finance midstream energy projects.
The Zacks analyst believes that First Data's extensive global presence has exposed it to foreign currency exchange rate risks.
Per the Zacks analyst, Kimberly-Clark's first quarter profit was largely hurt by higher pulp and other raw material costs. This led to a raised input cost inflation view of $400-$550 million for 2018.
The Zacks analyst believes that the surge in long-term debt and negative free cashflow are hurting Enbridge's ability to finance midstream energy projects.
The Zacks analyst believes that First Data's extensive global presence has exposed it to foreign currency exchange rate risks.
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