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Research Daily

Tuesday May 9, 2017

Today's Research Daily features new research reports on 16 major stocks, including Visa (V), Shell (RDS.A) and HSBC (HSBC).

Buy-rated Visa shares have outperformed the Zacks Financial Services Transaction sector over the last year (up +16.1% vs. +14.7%) but is behind rival Mastercard (up +19.4%). Visa’s earnings beat expectations and also increased year over year. Results were driven by the acquisition of Visa Europe and solid growth in payments volume as well as processed transactions.

The Zacks analyst likes the company’s strategic acquisitions and alliances, technology upgrades and effective marketing efforts. In addition, global economic uncertainty and legal headwinds are major concerns. Higher client incentives also pose a risk on profitability. (You can read the full research report on Visa here.)

Shell shares have outperformed the Zacks Integrated Oil industry over the past six months (up +6.5% vs. +2.6% gain for the industry) as well as its smaller rival BP (up +4.4%). The integrated behemoth's upstream unit swung to a Q1 profit from a year-ago loss thanks to steady oil price recovery during the period and production contribution of BG assets.

The Hague-based supermajor was also able to reduce operating costs and progress on its large divestment program. Importantly, the Anglo-Dutch company generated a surge in cash flows, allowing it to cut debt and cover its cash dividend. However, with oil falling below the psychologically-critical $50 threshold again,

Shell's near-to-medium term revenue outlook remains cloudy. Hence, the Zacks analyst thinks investors should wait for a better entry point before buying shares in Europe's largest oil company. (You can read the full research report on Shell here.)

HSBC shares underperformed the Zacks-categorized Foreign Banks industry over the least six months, gaining +9.1% vs +14.5%. Further, the bank’s first-quarter 2017 net income declined, reflecting absence of Brazil business results. A dismal European economy and weak loan demand are expected to lead to muted revenue growth in the quarters ahead.

The Zacks analyst likes its extensive global network, strong capital position and a solid asset growth. Moreover, continued disposal of unprofitable/non-core operations has enhanced its efficiency, as operating costs remain manageable. Further, the company remains on track to achieve its 2017 cost savings target. (You can read the full research report on HSBC here.)

Other noteworthy reports we are featuring today include Sysco (SYY), Kellogg (K) and Consolidated Edison (ED).

The Best & Worst of Zacks

Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 11X worse than the market.  See these critical buys and sells free >>

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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