Today's Must Read
3M (MMM) Retains Core Business Focus, Aims for Holistic Growth
Volume Growth Likely to Boost Union Pacific's (UNP) 4Q
Monday, January 15, 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 Wal-Mart (WMT), 3M (MMM) and Union Pacific (UNP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Wal-Mart’s shares have been strong performers lately, with the stock up +32.1% over the last six months, outperforming the S&P 500's +13.3% gain in the same time period. Wal-Mart Stores, recently announced plans to drop the “hyphen” and “stores” from its name to officially emerge as an omnichannel retailer.
The company has been riding on its robust past record, which derives strength from constant e-commerce initiatives, like buyouts, alliances, surging grocery business and improved delivery systems. Thanks to these trends, along with solid traffic, Walmart’s third-quarter fiscal 2018 marked its ninth and 13th straight quarter of positive earnings surprise and comps growth, respectively.
Also, the company’s international business remains a growth driver. However, costs associated with technological and e-commerce investments; mix impact from growing e-commerce operations and a compelling pricing strategy have been hurting Walmart’s gross margin for a while now. Stiff competition and volatile consumer spending also pose threats.
Shares of Buy-rated 3M have gained +11.8% over the past three months, outperforming the Zacks Diversified Operations industry, which has gained +1.9% over the same period. The Zacks analyst likes 3M's global footprint, diversified product portfolio and ability to penetrate different markets.
Moreover, 3M is continuing with its portfolio restructuring efforts by divesting assets that no longer fit in its strategy and continues to make investments in other lucrative markets. Portfolio management, investment in innovation and business transformation are the three key levers on which 3M intends to focus. 3M also intends to continue investing in capital expenditures and R&D to support organic growth as it aims a prudent capital structure strategy and increased capital deployment.
Furthermore, 3M is standardizing its business processes through a new, global ERP system and expects to save $500 to $700 million annually by 2020. However, high pension expenses continue to be a drag on the company’s bottom line.
(You can read the full research report on 3M here >>>).
Buy-rated Union Pacific’s shares have outperformed the Zacks Rail industry as well as fellow railroad operator Norfolk Southern Corporation over the last six months. While Union Pacific has gained 29.5%, the industry it belongs to and Norfolk Southern have rallied 15.5% and 25%, respectively, in the same time period.
The Zacks analyst expects volume growth to aid Union Pacific's results in the fourth quarter of 2017. Key segments like intermodal and chemicals should drive growth. Detailed results should be out on Jan 25. The company's efforts to reward shareholders through share buybacks and dividend payouts are also impressive. Its efforts to cut costs to drive its bottom line are encouraging too.
The positive sentiment surrounding the stock can be made out from the fact that the Zacks Consensus Estimate for fourth-quarter earnings has been revised 0.7% upward over the last 60 days. However, declining automotive volumes and high debt levels are concerns.
Other noteworthy reports we are featuring today include Humana (HUM), Southern (SO) and Western Duke Energy (DUK).
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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>>>