Today's Must Read
Pricing & Smokeless Unit Aids Altria (MO), Cigarette Volumes a Woe
Customer Additions, Ongoing Investments Aid NextEra (NEE)
Friday, August 3, 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 JPMorgan (JPM), Altria (MO) and NextEra (NEE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
JPMorgan’s shares have outperformed the Zacks Major Regional Banks industry over the last six months (+6.8% vs. +1.4%). Also, the company has an impressive earnings surprise history, having surpassed expectations in each of the trailing four quarters. Its second quarter 2018 results were driven by higher-than-expected trading revenues, improvement in investment banking fees and rise in loans.
The Zacks analyst thinks expansion into new markets, focus on strengthening the card business, higher interest rates and rising loan demand will benefit the bank’s financials. Also, lower tax rates and easing of stringent regulations are expected to offer some support.
However, dismal mortgage banking (as originations continue to decline) remains a major concern. This is expected to hurt revenue growth to some extent in the near-term.
Shares of Altria have outperformed the Zacks Tobacco industry in the last six months (-10.9% vs. -12.4%), Altria has been delivering year-over-year bottom-line growth for quite some time and maintained the upside in second-quarter 2018. Performance during the quarter was mainly backed by lower outstanding shares and reduced adjusted tax rate. In fact, solid performance in the first half of 2018 propelled management to raise 2018 view.
The Zacks analyst thinks Altria has been progressing well with reduced risk products. Pricing also continues to drive the company’s top line. On the flip side, stern FDA regulations combined with increased health consciousness has been taking a toll on cigarette sales.
Notably, cigarette shipment volumes fell 10.8% year over year during second quarter, wherein total cigarette retail share declined 50.2%. But volumes in this category are expected to remain soft in the forthcoming periods, owing industry-wide headwinds.
NextEra’s shares have outperformed the Zacks Electric Power industry over the last year (the stock is up +15.5% vs. the -4.1% decline for the industry). Second-quarter earnings were higher than estimates, courtesy of strong performance of both its subsidiaries.
The Zacks analyst thinks NextEra Energy’s investment to strengthen its infrastructure and ongoing capital projects, when completed, will help it serve its expanding customer base more efficiently. The expansion of its natural gas operation through strategic acquisitions is going to have a positive impact on earnings.
However, the company’s nature of business is subject to complex and comprehensive federal, state and other regulations. Substantial investments are undertaken to ensure the safety of nuclear operation. That said, the risk of unplanned outages remains, which could derail its normal operation and impact profitability.
Other noteworthy reports we are featuring today include Tesla (TSLA), Prudential (PRU) and Illinois Tool Works (ITW).
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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>>>