Today's Must Read
Trading Offset Morgan Stanley's (MS) Investment Banking Woes
High Volumes, Shipping Rates Aid FedEx (FDX), Costs Ail
Thursday, June 21, 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 Nike (NKE), Morgan Stanley (MS) and FedEx (FDX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Nike’s shares have outperformed the Zacks Shoes and Retail Apparel industry year to date (+19.5% vs. +16.3%), driven by strength in international business and the global NIKE Direct business which has been aiding its quarterly performance. Notably, the company delivered top- and bottom-line beat in third-quarter fiscal 2018 which also marked the 23rd straight earnings beat.
Quarterly results reflected significant progress on the Consumer Direct Offense, positioning it for strong profitable growth in the future. Further, it closed the third quarter with expectations of a trend reversal in its North America business in the fourth quarter, backed by the introduction of new innovation platforms and differentiated customer experiences in the marketplace.
Consequently, it provided robust guidance for fourth-quarter fiscal 2018 and initial view for fiscal 2019. However, its higher SG&A expenses are likely to continue hurting results in the fourth quarter. Estimates have been stable ahead of fourth quarter earnings.
Shares of Morgan Stanley have underperformed the Zacks Investment Banking industry over the last six months (-5.3% vs. -0.7%). Yet, the company possesses an impressive earnings surprise history, beating the Zacks Consensus Estimate in each of the trailing four quarters.
The Zacks analyst likes the company’s efforts to lower balance sheet risk and strengthen wealth management operations. These initiatives, along with cost saving initiatives will continue to support growth.
Also, continued market volatility is expected to aid trading revenues. However, muted investment banking performance is expected to hurt the company’s top-line growth. Further, higher interest expenses mainly owing to rise in interest rates are expected to hurt its net interest income to some extent.
FedEx’s shares have outperformed the Zacks Air Freight and Cargo industry and rival United Parcel Service in the last year. The company has gained +18.8% while the industry it belongs to and UPS have rallied +13.5% and +4.2%, respectively, in the same period.
Ushering in further good news, the company reported better-than-expected earnings per share and revenues in the fourth quarter of fiscal 2018. Both metrics also improved year over year. Results were aided by e-commerce growth and a buoyant U.S. economy. Additionally, higher shipping rates and volume growth are huge positives for FedEx.
Meanwhile, lower tax rates are boosting the company’s bottom-line performance. The Zacks analyst is also impressed by FedEx’s decision to reward shareholders through dividend payments and share buybacks.
However, high costs are hurting the bottom line. Significant investments at the company's Ground unit are pushing up costs as well. Capital expenses are estimated to be $5.6 billion for fiscal 2019. Trade war related fears are also weighing on FedEx.
Other noteworthy reports we are featuring today include TOTAL S.A. (TOT), Ingersoll-Rand (IR) and ArcelorMittal (MT).
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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>>>