Today's Must Read
Caterpillar (CAT) Rides on Buoyant Global Demand, Cost Cuts
Strong Crossover & Truck Sales Drive General Motors (GM)
Wednesday, May 9, 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 Disney (DIS), Caterpillar (CAT) and General Motors (GM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Disney’s shares have lost -5.3% year to date, underperforming the Zacks Media Conglomerates industry’s -2.4% decline in that same time period. Disney’s impressive second-quarter fiscal 2018 results benefited from continuing strength at Parks & Resorts segment and stupendous success of Marvel title Black Panther, which were enough to mitigate another dismal performance from its ESPN segment.
Parks & Resorts gained from significant visitor growth, increased per capita spending and shift in the timing of the Easter holiday. However, higher programming costs negatively impacted ESPN’s profitability. The Zacks analyst thinks continued subscriber loss remains a concern for the division.
Additionally, higher spending on ESPN+ is likely to hurt profitability. Nevertheless, Disney’s scintillating slate of movie titles, Avengers: Infinity War’s impressive collections and strong book rates at Parks & Resorts are positive developments that will help the stock to rebound in the rest of fiscal 2018.
Shares of Strong Buy-ranked Caterpillar have gained +49.4% over the past year, outperforming the Zacks Construction and Mining industry which has increased +47.6% over the same period. Caterpillar’s first-quarter earnings per share (EPS) soared 120% while revenues surged 32% on a year-over-year basis.
Higher sales volume owing to improved end-user demand across all regions and end markets drove results. Driven by strong order rates, increasing backlog, positive economic indicators Caterpillar expects adjusted EPS at $10.25-$11.25 for 2018, the mid-point of which reflects year-over-year rise of 56%.
The Construction segment will benefit from infrastructure development in China and continued demand improvement in North American residential, non-residential and infrastructure markets. Rising commodity prices will drive Resource Industries and Energy & Transportation’s revenues. Cost cutting efforts and additional investments in expanded offerings and services will drive growth.
Buy-ranked General Motors’ shares have outperformed the Zacks Domestic Automotive industry over the last one year, increasing +6.1% vs. -1.2%. General Motors’ first-quarter 2018 earnings and revenues beat expectations. During the quarter, crossover sales rose 23% on a year-over-year basis. However, both earnings and revenues declined on a year over year basis.
The Zacks analyst thinks the company’s capital allocation strategy, initiatives to make its vehicles more advanced, safer and fuel efficient and focus on technology development are major positives. Its restructuring activities are also expected to benefit the company in the long run. Also, the company is raising investment in emerging markets to boost global sales. Yet frequent vehicle recalls, high inventory level of passenger cars and unfavorable currency translation effects are few headwinds for the company.
Other noteworthy reports we are featuring today include Phillips 66 (PSX), Capital One (COF) and Cognizant (CTSH).
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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>>>