Today's Must ReadNo Report.
Friday, November 3, 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), Boeing (BA) and Chubb (CB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Buy-rated Honeywell’s shares have outperformed the Zacks Diversified Operations industry in the year to date period, increasing +25.5% vs. a -3.2% decline. The company recorded solid third-quarter results with year-over-year increase in earnings and revenues that beat expectations.
With a flexible yet disciplined focus on cost and productivity, Honeywell’s diversified business portfolio has the potential to earn consistent above-average returns and mitigate operating risks through a balanced organic and inorganic model. The Zacks analyst likes the company’s diligent focus on working capital management, free cash flow generation and a conservative balance sheet.
The company’s balanced mix of long- and short-cycle businesses, along with a decent organic growth in new products and expansion in high-growth regions augur well on a long-term perspective. However, adverse foreign currency translations, high R&D expenses and volatility in commodity prices are likely to peg back its growth momentum to some extent.
Shares of Boeing have surged +88.2% over the past year, outperforming the Zacks Aerospace & Defense sector, which gained +50.2% during the same time period. Boeing's third-quarter 2017 earnings surpassed expectations but declined year over year. Meanwhile, revenues missed the consensus mark and also fell from the year-ago figure.
On a bright note, the company increased its earnings guidance for 2017. Notably, Boeing is the largest aircraft manufacturer in the world in terms of revenue, orders and deliveries, and one of the largest aerospace and defense contractors. In this regard, the company’s 20-year market outlook forecasts commercial jetliner demand to increase by 3.6%.
Yet the aerospace major continues to face challenges from order cancellations, stiff competition as well as falling delivery numbers. Furthermore, Boeing’s 787 Dreamliner's deferred production cost remains a cause of concern.
Chubb's shares have underperformed the Zacks Property, Casualty and Title industry over the last three months, losing -0.4% vs. an increase of +2.8%. Chubb’s third-quarter operating loss came in under expectations, but compared unfavorably with the earnings in the year-ago quarter. The unprecedented hurricane activity and the two successive earthquakes led to this dismal performance.
Nevertheless, Chubb stands a good chance of taking leadership in the P&C space, benefiting from complementary products and services. Its inorganic growth story is impressive and should help it achieve higher long-term ROE. A strong capital position helped Chubb engage in shareholder-friendly moves and invest in strategic initiatives to drive growth.
Notably, it is on track to achieve annual run-rate integration-related savings of $875 million (up from $800 million as guided earlier) by the end of 2018. However, exposure to cat loss and escalating expenses raise concerns for Chubb.
Other noteworthy reports we are featuring today include Kraft Heinz (KHC), Southern (SO) and Northrop Grumman (NOC).
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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>>>