Today's Must Read
Deere (DE) Rides on Wirtgen Buyout, Soaring Expenses Ail
Loan Growth Supports Mitsubishi (MUFG), Capital Level Solid
Thursday, May 24, 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 TJX Companies (TJX), Deere (DE) and Mitsubishi UFJ Financial (MUFG). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
TJX Companies' shares have outperformed the Zacks Discount Stores industry over the last six months, gaining +23.9% vs a +16% increase, courtesy of its impressive comps record. Comps have been gaining from continued rise in consumer traffic and strength in merchandising policies.
The Zacks analyst thinks that these factors, along with TJX Companies’ off-price model, strategic store locations, impressive brands and fashion products have been driving its stores and online performance. This was visible in the company’s first-quarter fiscal 2019 results, wherein both top and bottom lines grew year over year and all major units reported comps growth.
The company remains focused on its sales-driving efforts, which are expected to help it witness further market share gains. These factors and a favorable inventory position encouraged management to raise fiscal 2019 earnings view. However, the company has long been witnessing high wage costs. Unfortunately, management expects this to linger and hurt earnings to some extent in fiscal 2019.
Shares of Deere have surged +27.9% over the last year, outperforming the Zacks Farm Equipment industry, which has gained +24.2% over the same period. Deere’s adjusted earnings increased 26% year over year in second-quarter fiscal 2018 but came in under expectations.
The top line grew 34% year over year and came in line with expectations. Deere projects total equipment sales growth at around 30% for fiscal 2018 and sales to be up 35% in third-quarter fiscal 2018, both compared with the year-ago periods. It expects that the Wirtgen acquisition will contribute about 12% to net sales for the fiscal and about 18% for the fiscal third quarter.
Further, Wirtgen will add $100 million in operating profit in the fiscal. The Zacks analyst thinks Deere will gain from rising replacement demand, strength in Brazil, higher housing starts, improving oil and gas sector and ease in tariffs. However, Deere’s results will be affected by weakness in agriculture demand and the U.S. tax reform. Elevated expenses will also thwart its results.
Buy-ranked Mitsubishi UFJ Financial's shares have declined -7.3% in the last six months, underperforming the Zacks Foreign Banks industry which has declined -3.1% over the same period. The company’s fiscal 2017 results reflect a strong capital position and decline in credit costs, partially offset by higher expenses.
Though the negative interest rates in Japan and global growth concerns along with strict regulations are headwinds, the Zacks analyst thinks strong capital ratios and organic growth are likely to drive the company’s bottom-line growth. Also, the company’s prospects look encouraging, as it focuses on several strategies under its medium-term business plan and global expansion.
Other noteworthy reports we are featuring today include Suncor (SU), Target (TGT) and TE Connectivity (TEL).
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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>>>