Today's Must Read
Cost Control, Streamlining Initiatives Aid Wells Fargo (WFC)
Intuit (INTU) Rides on Product Refresh, Higher Subscriptions
Tuesday, May 18, 2021
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 Bank of America Corporation (BAC), Wells Fargo & Company (WFC), and Intuit Inc. (INTU). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Shares of Bank of America have gained +92.4% in the past one-year period against the Zacks Banks - Major Regional industry’s gain of +88.8% and the S&P 500 index's +43% gain in the same time period. This reflects the improved interest rate backdrop and the company's greater leverage to higher interest rates relative to its peers.
The Zacks analyst believes that the company’s first-quarter 2021 results reflected solid capital markets performance, big reserve release and adverse impact of muted loan demand. Further, opening of new branches, enhanced digital offerings, strategic buyouts and efforts to manage expenses will aid profitability in the quarters ahead.
However, low interest rates and no near-term chance of change in the same are expected to keep hurting the bank’s margins and interest income. Also, faltering loan demand poses a concern. But a strong balance sheet and liquidity position are expected to continue aiding its financials. Further, the company will keep enhancing shareholder value through sustained capital deployments.
Shares of Wells Fargo have outperformed the Zacks Banks - Major Regional industry in the last six-month period (+83.1% vs. +50.1%). Additionally, the company’s earnings surprise history is impressive, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters.
The Zacks analyst believes that the company's efforts to enhance compliance and risk-management capability, along with streamlining initiatives, seem encouraging. Also, strong deposits balance depicts robust liquidity position. Declining expenses due to its cost savings efforts might aid bottom-line growth.
However, revenues are affected by low rates and legal hassles pose a concern. Further, restrictions on asset growth placed by Federal reserve have taken a toll on the company's loan growth ability. Nevertheless, it carries less credit risk in case of any economic downturn.
Shares of Intuit have outperformed the Zacks Computer – Software industry in the last one-year period (+46.3% vs. +34.2%). The Zacks analyst believes that Intuit is benefiting from strong momentum in online ecosystem revenues and solid professional tax revenues.
The TurboTax Live offering is also driving growth in the Consumer tax business. Solid momentum in the company’s lending product, QuickBooks Capital, remains a positive. Moreover, the company’s strategy of shifting its business to cloud-based subscription model will help generate stable revenues over the long run.
Nonetheless, Intuit’s near-term prospect looks gloomy as the global lockdown amid the coronavirus crisis has affected small businesses, posing risks to its revenue growth. Additionally, higher costs and expenses due to increased investments in marketing and engineering teams are likely to continue impacting bottom-line results in the near term.
Other noteworthy reports we are featuring today include Infosys Limited (INFY), Dollar General Corporation (DG) and Lennar Corporation (LEN).
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Director of Research
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>>>