Today's Must Read
Diversification Aids Itau Unibanco (ITUB); High Costs a Woe
Expedia (EXPE) Hurt by Sluggish Corporate Travel Business
Thursday July 6 2017
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 Canadian National (CNI), Itau Unibanco (ITUB) and Expedia (EXPE).These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Canadian National’s shares have done well since the election (up +28%) and have also posted strong gains over the last year (up +38.8%), but failed to outperform the Zacks Transportation Rail industry which gained +39.5% over the same period. However, the stock has outperformed fellow railroad operator, Canadian Pacific, which has gained +24.8% over the last year. The Zacks analyst likes the company's initiatives to reward investors.
Furthermore, the company's 2017 capital investment plan is a positive. This plan complements its efforts to promote safety and enhance productivity. Due to these tailwinds we expect the stock to perform well in the second quarter. Detailed results should be out on Jul 25. Estimates have moved up 3.2% to $0.97 per share over the last month. The company's high debt levels, however, raise concerns.
Shares of Itau Unibanco underperformed the Zacks categorized Foreign Banks industry year to date losing -6.5% vs a gain of +16.8%. Rising operational risk, with management's expectation of non-interest expenses to grow in the range of 1.5–4.5% in 2017, remains a concern. But the Zacks analyst likes the company focus on building strategies to expand inorganically. In Dec 2016, it completed the acquisition of 40% equity stake in Itau BMG Consignado. Further, it has been diversifying its loan composition with focus on origination of products with lower risks and more guarantees.
Expedia’s shares have underperformed the Zacks characterized Electronic Commerce industry year to date gaining +32.6% vs +40.4%. However, it has outperformed its peers Priceline (up +26.8%) and TripAdvisor (down -19.4%) over the same period. The company's agency business looks good, which is no doubt benefiting from the ETP initiative.
However, the Zacks analyst thinks increased investments in the business, increasing competition across geographies, discounts offered by larger chain hotels and lack of ADR growth in emerging markets can make margin expansion difficult. Detailed results are expected on Jul 27. Estimates have increased by 0.7% to $4.18 per share over the last 60 days.
Other noteworthy reports we are featuring today include Edison International (EIX), Assurant (AIZ) and Delphi Automotive (DPLH).
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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 Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>