Today's Must Read
Order Growth, Positive Budget Boost Lockheed Martin (LMT)
Higher Premiums Aid Chubb Limited (CB), Rising Costs Ail
Friday, April 27, 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 Bank of America (BAC), Lockheed Martin (LMT), and Chubb (CB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Bank of America’s shares have outperformed the Zacks Major Regional Banks industry over the last six months, gaining +8.2% vs. +2.7%. Also, the company possesses an impressive earnings surprise history, beating expectations in each of the trailing four quarters. Its first quarter 2018 results benefited from higher rates, increase in equity trading income and lower expenses.
The Zacks analyst thinks increase in loan and deposit balances, rising interest rates, and efforts to manage expenses as well as expand into new markets will support profitability. However, a fall in mortgage banking income due to lower volumes and a decline in refinancing activity along with uncertainty related to performance of capital markets remain major concerns. These are expected to hurt the bank's revenues to some extent.
Shares of Buy-ranked Lockheed Martin have gained +22.6% over the last year, underperforming the Zacks Aerospace Defense sector, which has gained +43.5% over the same period. Lockheed Martin started off 2018 on an impressive note. Both its first-quarter earnings as well as revenues surpassed expectations.
Being the largest defense contractor in the world, the company experiences strong demand for high-end military equipment in both domestic as well as overseas markets. Consequently, strong order growth has been a primary growth driver for this company.
Lockheed Martin continues to be a strong cash generator, helping it to take important cash deployment decisions. Lockheed Martin paid dividends of $586 billion in the reported quarter, up from $544 million paid in the first quarter of 2017.
The recent expansionary budgetary updates will immensely boost this defense prime's business growth. However, the company faces intense competition for its broad portfolio of products and services in both domestic and international markets.
Chubb’s shares have lost -6.7% year to date, underperforming the Zacks Property, Casualty and Title industry, which has declined -0.4% over the same period. Chubb’s first-quarter 2018 earnings beat expectations but deteriorated year over year on higher catastrophe loss.
Though the bottom line was weighed down by 64 cents in cat loss, net investment income was solid while premium revenue and commercial P&C pricing improved across many of its businesses lines. The Zacks analyst thinks Chubb stands a good chance of leading the P&C space, benefiting from compelling products as well as services. Its inorganic growth story is impressive, helping it achieve a higher long-term ROE.
A strong capital position aids Chubb to boost shareholders’ value and invest in strategic initiatives to drive growth. The company is on track to achieve annual run-rate integration-related savings of $875 million by the end of 2018. But, exposure to cat loss induces volatility in underwriting profitability. Escalating expenses too weigh on margin expansion.
Other noteworthy reports we are featuring today include Halliburton (HAL), SunTrust Banks (STI) and ServiceNow (NOW).
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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>>>