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Research Daily

Monday, March 13, 2017

Today's Research Daily features new research reports on 16 major stocks, including Wells Fargo (WFC), Altria (MO) and Dow Chemical (DOW).

Wells Fargo shares have gained +20.1% over the last six months, underperforming the Zacks Major Banks industry which has gained +31.9% over the same period. The bank has yet to fully recover from the scandal even after a $190-million settlement with regulators, but the company’s fourth-quarter 2016 earnings outpaced estimates and prior-year quarter’s earnings.

The new management team is making all the right moves and further downside risks in the stock are low at this stage. But it will likely take a while for clouds to be fully lifted, though continued growth in loans and deposits and expansion moves should support its growth profile. Also, the company raised its prime lending rate to 3.75%, following Fed interest rate hike to 0.50%–0.75%, which is likely to alleviate margin pressure in the coming period. (You can read the full research report on Wells Fargo here.)

Altria have outperformed the Zacks Consumer Staples sector in the past three months, gaining +14.6% vs a +5.6% increase. Altria reported mixed fourth quarter earnings though earnings and revenue increased year-over-year. The Zacks analyst is optimistic about Altria’s subsidiary, Nu Mark LLC, which has expanded the distribution of MarkTen XL e-vapor products.

Also, the company enhanced its smokeable segment with the takeover of Nat Sherman. Further, the recent takeover of SABMiller by Anheuser-Busch InBev's helped Altria maximize the value of its SABMiller investment. However, strict anti-smoking regulations by governments globally in the form of restrictions on packaging and high excise duties coupled with currency headwinds remain woes. (You can read the full research report on Altria here.)

Shares of Dow Chemical have gained +9.1% over the past three months, outperforming the Zacks Chemicals Diversified industry (up +4.4% over the same period). The Zacks analyst likes the planned merger with DuPont, which is expected to create significant synergies. Dow should also gain from cost synergies associated with Dow Corning Silicones business and its strategic investments in the U.S. Gulf Coast and the Middle East. Estimates for first-quarter 2017 have also been stable of late.

However, Dow’s agriculture business remains affected by depressed crop commodity prices. The company also faces pricing headwinds, feedstock cost pressure as well as weak demand in the energy market. (You can read the full research report on Dow Chemical here.)

Other noteworthy reports we are featuring today include Colgate (CL), John Wiley & Sons (JW.A) and Papa John's (PZZA).

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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 >>>

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