Today's Must Read
P&G's (PG) Productivity & Cost Saving Plan Aids Bottom Line
Focus on Core Operations Aid Citigroup (C), Legal Woe Linger
Thursday, August 2, 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 Apple (AAPL), Procter & Gamble (PG) and Citigroup (C). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked Apple’s shares have outperformed the Zacks Computer - Mini computers industry in the last six months, gaining +28.7% vs. +28.3%. The company reported impressive third-quarter fiscal 2018 results driven by robust iPhone sales as well as continued momentum in the Services segment. Higher ASP drove iPhone results in the quarter.
The Services segment has become the new cash cow Apple and is expected to grow strongly driven by increasing adoption of Apple Music & Apple Pay. Going ahead, we believe Apple’s foray into fast-growing technologies like autonomous vehicle, artificial intelligence (AI) & AR/VR will drive growth. Shares have outperformed the industry on a year-to-date basis.
Nevertheless, significant competition in most of its operating markets and strong demand for feature-rich smartphones at a much cheaper price are major headwinds for the company.
Shares of Procter & Gamble have gained +13.0% in the last three months, outperforming the Zacks Soap and Cleaning Materials industry, which gained +9.1% over the same period. The company posted its 13th consecutive earnings beat in fourth-quarter fiscal 2018.
The company’s focus on product improvement, packaging and marketing initiatives, and productivity cost-savings plan bodes well. Further, it is benefiting from higher demand for skincare products, along with fabric and home care products.
However, the company is witnessing strained margins owing to increased commodity and shipping costs, adverse currency, higher business investments and aggressive pricing from private-label products amid intense competition. Moreover, sales remain muted due to weak demand and lower prices. While the company expects recently announced price increases to help rebound sales and margins, analysts’ fear of impacts on demand and consumption.
Citigroup’s shares have underperformed the Zacks Banks - Major Regional industry over the last six months (-1.9% vs. 1%). Further, the company possesses an impressive earnings surprise history, beating the Zacks Consensus Estimate in all the trailing four quarters. The company’s second-quarter 2018 earnings reflected high revenues, along with loan growth. Moreover, controlled expenses were experienced.
The Zacks analyst believes that the company’s restructuring and streamlining efforts, strategic investments in core business, lower tax rate and expense management will likely support profitability. Recently, the capital plan approval reflects strong capital position. Yet several issues, including litigation burden, keep us apprehensive. Also, despite rising rates, margin remains under pressure, due to persistent decline in the company’s legacy holdings portfolio.
Other noteworthy reports we are featuring today include Petrobras (PBR), Fiserv (FISV) and Aflac (AFL).
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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>>>