Today's Must Read
E-commerce, Dividends & Buybacks Boost UPS Amid High Costs
Infrastructural Investments Aid Duke Energy (DUK), Costs Ail
Wednesday, March 21, 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 Toyota (TM), United Parcel Service (UPS) and Duke Energy (DUK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Strong Buy-rated Toyota’s shares have outperformed the Zacks Foreign Automotive industry in the last three months, increasing +0.8% vs. -2.9%. Toyota’s operating income and revenues rose year over year in the third quarter of fiscal 2018. For fiscal 2018, it provided a positive outlook, primarily based on cost reduction initiatives and uptrend in worldwide sales, including sales in Japan.
Further, Toyota plans to sell 5.5 million of electrified vehicles by 2030 for which it is collaborating with many companies to develop batteries. Additionally, by 2025, it has planned to sell vehicles either with a dedicated electrified model or an electrified option. The company is also focusing on the reuse and recycling of batteries for which it is promoting the usage of plug-in vehicle charging and hydrogen refueling stations.
Shares of United Parcel Service have underperformed the Zacks Air Freight and Cargo industry as well as rival FedEx in the last one year. While the stock has gained +1.4%, the industry has advanced +11.9%. Shares of FedEx have gained +28.6% in the period.
Despite this unimpressive price performance, the Zacks analyst thinks the rapid improvement in e-commerce is aiding UPS significantly. The new tax law, which reduces corporate tax rate significantly, is also a positive for the company.
In February 2018, UPS announced its decision to increase quarterly dividends by 10%. A further uptick in such shareholder-friendly activities cannot be ruled out, in the light of the savings induced by the Tax Cuts and Jobs Act. The company's efforts to expand globally also raise optimism in the stock. However, high costs continue to limit bottom-line growth. UPS' forecast for 2018 capex, which is higher than 2017 levels, is expected to push up costs further.
Duke Energy's shares have underperformed the Zacks Electric Power industry in the last year, declining -7.7% vs -5.7%. Duke Energy ended 2017 on a mixed note. While its fourth-quarter earnings surpassed the Zacks Consensus Estimate, revenues failed to meet the mark.
The Zacks analyst likes the fact that Duke Energy currently boasts a robust five-year capital plan and plans to invest about $48.2 billion in growth projects over the 2018-2022 time frame. With respect to its commercial renewables business, the company continued to expand its wind and solar portfolio, ending 2017, with nearly 2,970 megawatts in 14 states.
However, Duke Energy faces challenges from severe weather conditions and natural calamities like hurricanes, which may result in breakdown and damage its infrastructure. In fact, Hurricane Irma had an adverse effect on the company’s operations in 2017. Moreover, the company expects to incur environmental compliance cost of $3.4 billion for the 2018-2022 time frame.
Other noteworthy reports we are featuring today include SunTrust Banks (STI), Monster Beverage (MNST) and Fiserv (FISV).
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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>>>