Today's Must Read
P&G's (PG) Productivity & Cost Savings Plan to Aid Margins
Cost Control Strategy Aids Wells Fargo (WFC) Amid Low Rates
Thursday, January 21, 2021
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 Alibaba Group (BABA), Procter & Gamble (PG) and Wells Fargo (WFC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Alibaba shares have underperformed the Zacks Internet Commerce industry over the past year (+19.4% vs. +50.7%). The Zacks analyst believes that the company continues to benefit from strong growth in metrics.
Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance. Its New Retail strategy is also gaining momentum. This is aiding growth in Tmall Import, Hema fresh food grocery business and Intime Department Stores.
However, higher costs associated with new initiatives remain a major concern. Also, COVID-19 related economic uncertainties and macro headwinds in China are major concerns. In addition, rising competition from e-commerce players poses a risk.
Shares of Procter & Gamble have gained +4.6% in the last six months against the Zacks Soap and Cleaning Materials industry’s gain of +4.1%. The Zacks analyst believes that Procter & Gamble stock has been benefiting from its robust earnings and sales surprise trend.
While it has reported an earnings surprise for the past several quarters, revenues topped estimates for the third straight time in the fiscal second-quarter. Further, earnings and sales improved on a year over year basis. Results were driven by robust top-line growth and improved margins.
Margins benefited from cost leverage and productivity initiatives, while sales were aided by strength across all segments, robust shipments, pricing and mix. It delivered adjusted free cash flow productivity of 113% in the fiscal second quarter. Driven by the robust results, it raised its outlook for fiscal 2021. However, currency headwinds are likely to affect results in fiscal 2021.
Wells Fargo’s shares have gained +39.6% over the past three months against the Zacks Major Regional Banks industry’s rise of +30.5%. The Zacks analyst believes that the company's efforts to enhance compliance and risk-management capability, along with streamlining activities, are encouraging.
The company's earnings surprise history is decent, having surpassed the Zacks Consensus Estimate in two of the trailing four quarters. Fourth-quarter results reflect benefits from reserve releases and lower expenses, partly muted by decline in revenues. Also, strong deposits balance depicts robust liquidity position.
Moreover, the company carries less credit risk in case of any economic downturn. Also, declining expenses due to its cost savings efforts, might support bottom-line growth. Nevertheless, Wells Fargo's revenues remain under pressure due to low rates and volatile fee income trend. Legal hassles also pose a concern.
Other noteworthy reports we are featuring today include Alphabet (GOOGL), Netflix (NFLX) and NextEra Energy (NEE).
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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>>>