Today's Must Read
Cost Control Efforts, Strong Balance Sheet Aids AmEx (AXP)
Equity Focus, Acquisitions Support BlackRock (BLK) Revenues
Thursday, January 11, 2018
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 Schlumberger (SLB), American Express (AXP) and BlackRock (BLK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Schlumberger’s shares have lost -11.4% over the last one year, following the Zacks Oil and Gas Field Services industry’s -19.8% decline. However, this compares unfavorably with rival Halliburton’s -4.9% decline. But the Zacks analyst stresses that Schlumberger is the largest oilfield services player in the world with presence in every energy market across the world.
Also, in all the operating business segments, the company is among the top players. The firm has been banking on growing hydraulic fracturing work in the North American land market. Schlumberger is also expected to generate significant cash flow from the Palliser Block project where the company will assist Torxen Energy in setting up more than 1,600 oil wells.
Since 2015, Schlumberger’s long-term debt load has increased considerably. Moreover, the company’s cash balance has been declining over the last six quarters, reflecting significant balance sheet weakness.
Shares of Buy-rated American Express are up +31.6% over the last year, outperforming the Zacks Financial Miscellaneous Services industry, which has gained +10.9% over the same period. The company continues to witness strong loan growth and credit metrics, plus lower operating costs.
The Zacks analyst likes its solid market position and strength in the card business. Significant opportunities from the secular shift toward electronic payments are key growth drivers. Strategic initiatives focusing on the platinum card portfolio and the OptBlue program will drive business volume. Cost reduction and return of significant capital to shareholders through dividend and share buyback are also positives.
However, an increase in provision for losses, high rewards expense and cost of card member services are some of the headwinds. American Express will likely incur nearly $2.4 billion charges in fourth-quarter 2017 from tax reform, which will cause its 2017 earnings to fall short of its guided range of $5.80-$5.90 per share.
Strong Buy-rated BlackRock’s shares have outperformed the Zacks Investment Management industry in the last six months, (+22.1% vs. +17.1%). This performance is supported by its impressive earnings surprise history, having surpassed expectations in three of the trailing four quarters.
The Zacks analyst likes the initiatives taken to restructure its actively managed equities business with an aim to meet changing client needs. These along with technological changes and its efforts to expand globally via acquisitions will further help top-line growth going forward. However, mounting expenses mainly due to continued rise in marketing costs is likely to hurt the bottom-line growth.
Other noteworthy reports we are featuring today include Aflac (AFL), Franklin Resources (BEN) and Deutsche Bank (DB).
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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>>>