Today's Must Read
Verizon (VZ) 5G Launch on Track, Wireline Woes Persist
AIG Gains from Strong Life Segment, Falling Revenue Hurts
Friday, April 13, 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 General Dynamics (GD), Verizon Communications (VZ) and American International Group (AIG). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
General Dynamics's shares underperformed the Zacks Aerospace – Defense industry in the last year (+16.9% vs. +49.2%). The company operates in a highly competitive market and has to rely on other companies to provide materials, components and subsystems for its products. The company’s dependence on international sales for a major portion of its revenues exposes it to the risk of currency fluctuations and other geo-political risks.
However, General Dynamics remains one of the only two contractors in the world equipped to build nuclear-powered submarines and its diverse portfolio of products and services. Moreover its wide customer base provides it with an opportunity to generate solid revenues from different sources.
The company will likely see solid growth momentum, following the introduction of the G600 in 2018. General Dynamics is committed to R&D activities that facilitate the introduction of new products and first-to-market enhancements.
Shares of Verizon have declined -0.8% over the last six months, outperforming the Zacks Wireless National industry’s loss of -3.4% during the same period.Verizon’s unlimited data plans have heated up the wireless industry and helped it gain additional postpaid customers. The company’s plan to launch 5G wireless broadband services in select U.S. cities in 2018, in order to boost its market presence, remains well on track. The company expects growth in 2018 on the back of the expected savings from tax reform.
However, Verizon continues to struggle in a highly competitive and saturated wireless market. Losses in wireline access lines, higher marketing costs of promotional plans and competitive video market remain major impediments. Verizon’s wireline division is struggling with persistent losses in access lines owing to competitive pressure from VoIP service providers and aggressive triple-play offerings by cable companies. All these are likely to weigh on the company’s revenues and margins.
AIG’s shares underperformed the Zacks Multi-Line Insurance industry year to date, losing -10.2% vs. -6.2%. The company has been suffering from tough market conditions and its massive size with numerous uncorrelated businesses creating little or no synergy. Weakness in its General Insurance segment and an exposure to catastrophes continue to bother.
However, AIG’s strategic divestitures have streamlined the company’s core operations. Strong performance of its Life and Retirement Segment remain major positives. Recently, the insurance giant appointed Brian Duperreault as its new CEO with expectations of improving operations by completing ongoing restructuring initiatives and making additional changes. Moreover, its strong fundamentals should support its share performance going forward.
Other noteworthy reports we are featuring today include Johnson Controls International (JCI), Humana (HUM) and eBay (EBAY).
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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>>>