Today's Must Read
Starbucks (SBUX) Tackles Soft Sales With Product Innovation
Marsh & McLennan (MMC) Grows on Accretive Acquisitions
Thursday, October 5, 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 ExxonMobil (XOM), Starbucks (SBUX) and Marsh & McLennan (MMC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
ExxonMobil’s shares have underperformed the Zacks Oil International Integrated industry (-9.4% vs. +0.8%) as well as peer Chevron (CVX was down -0.1%). Tensions between the U.S. and Russia could mar the integrated major’s prospects for exploiting huge Russian oil and gas reserves. Moreover, dependence on costly offshore drilling might dent ExxonMobil’s cashflow.
However, ExxonMobil has a leading position in the energy industry owing to the size and diversity of its asset base, both in terms of business mix and geographical footprint. With a stable cash position, the company’s balance sheet is one of the best in the industry. The company has been investing heavily in its extensive refining businesses, which will likely help it counter downturns in upstream businesses owing to volatile commodity prices. Also, ExxonMobil’s earnings surprise history is pretty attractive.
Starbucks’ shares are down -2.9% year to date, underperforming the Zacks Food & Restaurants industry, which is up +6.5% over the same period. The consequential increment in spending is likely to create pressure on its bottom line in the near term. Also, economic, geopolitical and consumer headwinds continue to impact Starbucks' results.
However, the company’s operating fundamentals such as solid global retail footprint, successful innovations, best-in-class loyalty program and digital offerings remain strong. Again, digital initiatives like mobile order/pay, delivery services and third-party loyalty partnerships can stimulate stronger sales trends in the Americas. CPG growth across the world as well as China/Asia expansion will also lead to value creation. These initiatives might benefit the company in the long run.
Shares of Buy-rated Marsh & McLennan have outperformed the Zacks Insurance Broker industry, year to date, gaining (+23.2% vs. +21.8%). The company is well poised for growth on the back of significant investments and acquisitions made within its different operating units.
These deals have enabled the company to enter new geographies, expand within the existing ones, foray into new businesses, develop new segments and specialize within existing businesses. Its effective capital management via share buyback and dividend payment is impressive.However, exposure to currency volatility due to high international presence and integration risks from acquisitions raises concerns. Also, low interest rates have suppressed investment income.
Other noteworthy reports we are featuring today include Waste Management (WM), Phillips 66 (PSX) and Intercontinental Exchange (ICE).
4 Stocks to Watch After the Massive Equifax Hack
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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>>>