Today's Must Read
CIP Goals, Easing Margin Pressure Aid PNC Financial (PNC)
Accenture (ACN) Rides on Acquisitions, '18 View Positive
Tuesday, December 26, 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 Alphabet (GOOGL), PNC Financial (PNC) and Accenture (ACN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Alphabet’s shares have outperformed the Zacks Internet Services industry in the year to date period (the stock is up +34.9% vs. +26.3% gain for the sector). Alphabet's strong advertising revenues and improving paid click growth remain the growth drivers. Its focus on innovation, AI, cloud, home automation space, strategic acquisitions and Android OS should continue to generate strong cash flows. The Zacks analyst likes Alphabet’s strong execution, which has helped the tech giant maintain its dominant share in a competitive, fast-growing search market. Its diversification strategy is also positive, but requires significant investment and involves uncertain payback periods, particularly since these efforts are at the cutting edge of technology. However, increasing litigation issues could continue to impact the company’s profits.
Shares of Buy rated PNC Financial have outperformed the Zacks Major Regional Banks industry so far this year, increasing +25% vs. +20.2%. The performance has been supported by the company’s impressive earnings surprise history. The stock hasn’t missed earnings expectations in any of the trailing four quarters. The Zacks analyst likes the company’s efforts to generate positive operating leverage through its cost-saving initiatives. Its deal to acquire the commercial and vendor finance business of ECN Capital is anticipated to be marginally accretive to earnings in 2017. Recently, following the Fed interest rate hike, the company has increased its lending rate to 4.50%. However, the company’s capital deployment activities do not seem sustainable and a stretched valuation reflects limited upside potential.
Accenture’s shares have outperformed the Zacks Consulting industry in the year to date period, gaining +31.4% vs. +28.1%. The company offers management consultancy, technology and outsourcing services. Accenture delivered impressive Q1 results with both the top and bottom lines surpassing expectations and improving year over year. In addition, the company provided an encouraging Q2 and FY18 outlook. 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 partnerships like Apple and acquisitions like IBB Consulting and VERAX are encouraging. The strategies have enabled Accenture to enter new markets, diversify and broaden its product portfolio, and maintain its leading position. Nonetheless, Accenture’s announcement of creating new jobs and investment plan of $1.4 billion for in the U.S. may dent its bottom-line results.
Other noteworthy reports we are featuring today include General Dynamics (GD), Micron (MU) and Royal Caribbean (RCL).
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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>>>