Today's Must Read
PepsiCo (PEP) Strong on Innovation & Productivity Plans
Strong Capital Position & Cost Saving Efforts Aid AmEx (AXP)
Friday, September 1, 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 Bank of America (BAC), American Express (AXP) and Pepsi (PEP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Bank of America shares have outperformed the Zacks Major Regional Banks industry over the last one year, gaining +50.9% vs. +29.6%. This price performance is backed by impressive earnings surprise history. The company has surpassed expectations for earnings in all the trailing four quarters.
Further, rising interest rates, increase in loan and deposit balances, efforts to streamline and simplify operations, and potential lesser regulations are expected to continue supporting the company's profitability going forward. However, fee income growth concerns remain a key concern. Specifically, fall in mortgage banking income owing to lower volumes and decline in refinancing along with uncertainty related to performance of capital markets are major concerns for the Zacks analyst.
Shares of Buy rated Pepsi have modestly lagged the broader market over the last year (+10.1% for PEP vs. +15.7% for the S&P 500), but they outperformed the Zacks Soft Drinks Beverages industry as well as Coke (KO was +8.3%). Despite global macro challenges, Pepsi has been doing well since 2014 on the back of significant innovation, ongoing revenue management strategies, improved productivity and better market execution.
The company has been facing challenges amid the shift in consumers’ preferences. Given this backdrop, it is gradually reshuffling its portfolio toward healthier “Everyday Nutrition Products” in order to adapt to the changing customer needs of healthier lifestyles. However, apart from sluggish CSD volumes, rising volatility in global markets and increasing currency headwinds may limit top line growth.
Buy rated American Express shares have gained +34.9% over the last year, higher than the broader finance sector’s gain of +19.1%. The Zacks analyst likes its solid market position, strength in card business and significant opportunities from the secular shift toward electronic payments. Strategic initiatives focusing on the platinum card portfolio and OptBlue program will drive business volume.
Cost reduction and return of significant capital to shareholders through dividend and share buyback are other positives. The stock has witnessed an upward revision in earnings estimate over the past 60 days.
Other noteworthy reports we are featuring today include Incyte (INCY), Eaton (ETN) and Autodesk (ADSK).
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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>>>