Today's Must Read
Strong Crossover Sales Drives General Motors (GM)
Model 3 Production Aids Tesla (TSLA), R&D Costs Hurt
Friday, August 4, 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 Apple (AAPL), General Motors (GM) and Tesla (TSLA).These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple’s shares are up +34.3% in the year-to-date period, handily outperforming the S&P 500 (up +10.5%) and the Zacks Technology sector (up +17.1%). Apple reported spectacular third-quarter fiscal 2017 results, with both earnings and revenues exceeding expectations.
On a year-over-year basis, both metrics registered strong growth driven by impressive Service segment performance. iPhone sales were also steady in the quarter and, the recovery witnessed in the iPad business was another big win for Apple. Upbeat guidance for the quarter ending in September widely alleviated fears of a delay in the launch of the next edition iPhone, dubbed as iPhone 8.
Going forward, the Zacks analyst thinks the Services segment as well as a foray into fast-growing technologies like AI & AR/VR as well as growing presence in emerging markets will emerge as long-term growth catalysts. However, the company’s China troubles continue unabated with another quarter of sales declines.
Shares of General Motors have underperformed the Zacks Domestic Automotive industry over the last six months, losing -5.6% vs. a gain of +2.3%. General Motors reported better-than-expected second-quarter 2017 earnings. However, revenues missed the estimate during the quarter. A high inventory level of passenger cars is a major concern for the company.
However, the Zacks analyst likes the strength in General Motors’ crossover segment. The company’s capital allocation strategy, initiatives to make its vehicles more advanced, safer and fuel efficient and focus on technology development are other positives. Moreover, the company's focus on capital deployment is expected to boost shareholder returns. Additionally, the company is raising investment in emerging markets to boost global sales.
Tesla’s shares have been standout performers lately, with the stock up +12.5% over the past three months vs. +3.3% gain for the Zacks Domestic Automotive industry. The outperformance was driven by ramping up of the production of Model 3 to achieve previously announced targets. Tesla’s adjusted loss in second quarter of 2017 has widened year over year. But revenues more than doubled year over year.
Moreover, Tesla’s new Master Plan is continuing, with a focus on expansion of product portfolio, introduction of car-sharing services, solar energy systems and development of self-driving capability. Also, the company is actively undertaking mergers and acquisitions to meet its targets and expand its business.
However, the company is facing supply chain problems which are restricting its ability to increase production. High R&D costs, low number of chargers, high requirement of capital expenditure and opposition to direct selling in some states are other headwinds.
Other noteworthy reports we are featuring today include Northrop Grumman (NOC), Intercontinental Exchange (ICE) and Humana (HUM).
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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>>>