Today's Must Read
Eni (E) Continues to Gain From New Oil Projects in Angola
Kimberly-Clark's (KMB) Restructuring Plans to Lift Margins
Thursday, June 14, 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 CSX Corporation (CSX), Eni (E) and Kimberly-Clark (KMB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
CSX Corporation’s shares have gained +25% over the past six months, outperforming the Zacks Rail industry, which has gained +10.2% over the same period. The Zacks analyst thinks CSX is benefiting from the Precision Scheduled Railroading system, which was implemented by the company’s former CEO — E. Hunter Harrison — who died in December 2017. The system, designed to improve its operational efficiency, is being backed by CSX’s current CEO Jim Foote.
Furthermore, improvement in operating ratio (operating expenses as a percentage of revenues) is in tune with the company’s cost control efforts. Strong performance of its intermodal segment is also a positive for the stock.
Efforts to reward shareholders through dividends and buybacks are commendable as well. Nevertheless, below-par performance of its automotive unit is a concern. The company's high debt levels represent a further challenge.
Shares of Buy-ranked Eni have gained +11.8% in the last six months, outperforming the Zacks Integrated Oil industry which has gained +6.9% over the same period. The Zacks analyst thinks start-up of new upstream projects in Ghana and Angola has been backing Eni's oil production. In fact, the company expects oil and natural gas production to rise 4% through 2018.
Notably, the decision to spend €3.5 billion through 2021 for exploration and production operations in 25 countries will likely help Eni reach its daily production target of 900 thousand barrels of oil equivalent in 2021. Apart from upstream businesses, Eni is planning to achieve growth in refining, marketing and chemical operations.
Through 2021, the company projects free cashflow of more than €2 billion from downstream activities. Eni is also committed to returning cash to shareholders through dividend payments as it intends to increase the annual dividend in 2018 by 3.8%.
Kimberly-Clark’s shares have underperformed the Zacks Consumer Staples industry over the last three months, losing -7.3% vs. -5.4%.The Zacks analyst likes Kimberly-Clark’s solid cost-saving efforts, which drove earnings growth in the first quarter.
Earnings were also fueled by higher sales, which gained from focus on innovations. The company is well on track with its FORCE and 2018 Global Restructuring plans, which together are expected to deliver cost savings of more than $2 billion over the next four years.
However, higher input costs have been troubling the company for a while now. Commodity cost inflation of $175 million, stemming from greater costs of pulp and other raw materials dented Kimberly-Clark’s adjusted operating profit in first-quarter of 2018. This also compelled management to raise its input cost inflation view for 2018 to a range of $400-$550 million.
Other noteworthy reports we are featuring today include Continental Resources (CLR), Caterpillar (CAT) and Check Point Software (CHKP).
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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>>>