Today's Must Read
General Motors (GM) Drives on Crossovers, Weak Pricing Ails
Enterprise (EPD) to Grow on Fee-Based Contracts, Debts High
Tuesday, November 7, 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 CVS Health (CVS), General Motors (GM) and Enterprise Products (EPD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
CVS Health’s shares have outperformed the Zacks Drug Stores industry over the last six months losing -17.6% vs. a decline of -21.1%. CVS Health exited the third quarter on a solid note with both earnings and revenues remaining ahead of the expectations.
Slower revenue performance on poor Retail/LTC numbers as well as margin debacle resulted in such a dull bottom line performance by the company in the quarter. Nonetheless, year-over-year growth in the top line was due to strong Pharmacy Services segment that benefited from the upside in the Specialty Pharmacy.
The Zacks analyst is encouraged to note that, despite a soft bottom-line scenario, the company reiterated its earnings outlook for 2017 indicating chances of recovery ahead. The company’s on-going strong 2018 PBM selling season is another upside. Moreover, the Omnicare and Target Pharmacy buyouts are gradually driving enterprise value at CVS Health.
Shares of General Motors have outperformed the Zacks Domestic Automotive industry over the last six months, increasing +24% vs. +9%. General Motors delivered better-than-expected adjusted earnings per share in third-quarter 2017. Revenues also surpassed expectations.
In the United States, in October, the automaker reported 252,813 deliveries. During the month, pickup deliveries rose 9% year over year and crossover deliveries rose 12% year over year. The company aims to focus more on the development of electric vehicles and plans to roll out 20 electric or hydrogen fuel cell vehicles by 2023.
It is also emphasizing to strengthen its brands, increasing retail sales and maintaining operating discipline. However, frequent vehicle recalls, high inventory level of passenger cars and currency fluctuations are few concerns the company has been facing.
Enterprise Products Partners' shares have gained +1.4 over the last year, even as the Zacks Oil Production Pipeline MLP industry declined by -7.7%. Enterprise Products has an extensive network of pipeline that spreads over almost 50,000 miles. The pipeline is connected to every major U.S. shale play and provides services to producers and users of commodities by transporting natural gas liquid (NGL), natural gas, crude oil and refined products.
The partnership has raised its cash distribution for 52nd successive quarters, reflecting stable fee-based cash flow from diversified midstream assets. It is expected that Enterprise Products Partners will maintain the trend as the partnership has a backlog of almost $9 billion fee-based growth projects.
However, the partnership’s escalating debt since 2012 reflects its weak balance sheet. The Zacks analyst is concerned about Enterprise Products’ rising operating costs.
Other noteworthy reports we are featuring today Berkshire Hathaway (BRK.B), PetroChina (PTR) and Automatic Data Processing (ADP).
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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>>>