Today's Must Read
Accenture's (ACN) Investment Strategy to Hurt Profitability
Upstream Unit Boosts PetroChina (PTR), Gas Price Cut a Woe
Wednesday, August 30, 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 Honeywell (HON), Accenture (ACN) and PetroChina (PTR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Honeywell’s shares have outperformed the Zacks Diversified Operations industry in the year-to-date period, gaining +20.6% vs. a -1.6% decline. The Zacks analyst likes the company’s diversified business portfolio and balanced organic and inorganic model. A diligent focus on working capital management, free cash flow generation and a conservative balance sheet remain key positives.
With a flexible yet disciplined focus on cost and productivity, Honeywell remains focused on increasing its presence in high-growth regions. However, adverse foreign currency translations, high R&D expenses to fend off competition and volatility in commodity prices are likely to peg back its growth momentum to some extent. In addition, Honeywell has yet to witness signs of stabilization in some of its major end markets and expects a tepid demand pattern for its business jets and mobile scanners in 2017.
Shares of Accenture have outperformed the Zacks Consulting industry over the last one year, gaining +15.1% vs. +14%. The Zacks analyst likes Accenture’s latest product additions in the analytics application space, given the increasing demand for digital solutions. Moreover, Accenture’s strategy of growing through acquisitions is encouraging.
The acquisitions have enabled Accenture to enter new markets, diversify and broaden its product portfolio, and maintain its leading position. Nonetheless, Accenture’s recent announcement of creating 15K new jobs by 2020 and investment plan of $1.4 billion for employee training and opening of 10 innovation centers across U.S. cities may dent its bottom-line results. Furthermore, increasing competition from peers and an uncertain macroeconomic environment may deter its growth to some extent.
ADRs of PetroChina have declined -15.1% over the last six months, underperforming the Zacks International Integrated Energy industry, which has inched up +0.2% over the same period. But with higher oil prices helping the state-run giant report a jump in first-half profits, the stock might return to favor. The energy titan's biggest unit – exploration and production – swung to profitability as oil price soared 50%.
PetroChina also experienced strong natural gas demand, while operational optimization helped control costs. However, the Zacks analyst is concerned over China’s decision to cut natural gas prices for industrial users that reduced margins in the company’s gas-wholesale business. Limited international operations and an ambitious investment program gives investors more reason to steer clear of the stock.
Other noteworthy reports we are featuring today include Dollar General (DG), Hormel Foods (HRL) and Cummins (CMI).
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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>>>