Today's Must Read
Higher Traffic Fuels Wal-Mart (WMT)'s Comparable Store Sales
Home Depot's (HD) Interconnected Strategy to Boost Sales
Wednesday, July 12, 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 Microsoft (MSFT), Wal-Mart (WMT) and Home Depot (HD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy rated Microsoft’s shares lagged the Zacks Tech sector through the fall, but have led the way over the last six months (up +11.7% versus +10.7%) on greater appreciation for the company's reorganization and repositioning. The Zacks analyst stresses that Microsoft is benefiting from continuing enterprise strength, strong Office 365 adoption and robust penetration of Azure (the company's cloud offering).
The recently launched Azure Stack service that allows customers to use Azure from their own servers is likely to provide Microsoft with a competitive edge over its peers. Further, the addition of LinkedIn has improved the company's presence in the social media market. All in all, the company has emerged as a leader in the cloud space that promises momentum on a number of fronts.
Shares of Buy rated Wal-Mart have been strong performers lately, with the stock up +9.4% over the last six months, outperforming the S&P 500's +6.8% gain in the same time period. The market's growing appreciation for the company's efforts to build e-commerce capabilities and strengthen the legacy business through improved and expanded product assortment, store cleanliness and an overall pleasant customer experience to drive traffic.
The positive comps for the last 11 quarters backed by higher traffic are some of the more tangible outcomes of these efforts. The company has been making steady investments in its business, both on the brick-and-mortar side as well as in the e-commerce platform.
These are necessary outlays for its long-term competitive positioning, but they nevertheless have bearing on near-term profitability. The stock's recent momentum and outperformance relative to others like Target (TGT) suggest that market participants are willing to be patient with management's plans.
Buy rated Home Depot’s shares are up +11.5% over the last six months, outperforming the Zacks Retail sector (up +10.5%) and the broader market (S&P 500 up +6.8%) in that same time period. Improving customer experience, solid execution and consistent housing market recovery helped the company post an earnings surprise in first-quarter fiscal 2017, retaining the four-year long trend of beating earnings estimates.
The company’s relentless focus on offering innovative products, boosting interconnected customer experience and driving productivity seems to be paying off. Moreover, the company raised earnings guidance for fiscal 2017 while retaining its sales view. On the flip side, market participants can justifiably raise valuation concerns, particularly following the stock’s stellar recent performance.
Other noteworthy reports we are featuring today include Manulife (MFC), Marsh & McLennan (MMC) and General Dynamics (GD).
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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>>>