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Research Daily

Wednesday, August 15, 2018

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Caterpillar (CAT), Morgan Stanley (MS) and Walmart (WMT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Buy-ranked Caterpillar’s shares have underperformed the Zacks Construction and Mining industry over the past year, gaining +18.8% vs. +19.6%. Backed by strong order rates, increasing backlog and positive economic indicators, Caterpillar guides adjusted EPS at $10.25-$11.25 for 2018, the mid-point of which reflects year-over-year rise of 56%. The construction segment will benefit from infrastructure development in China and continued improvement in North American residential, non-residential and infrastructure markets.

Rising commodity prices will drive Resource Industries and Energy & Transportation’s revenues. Cost cutting efforts and additional investments in expanded offerings and services will drive growth. The stock underperformed the industry over the past year. Its estimates have gone up lately. 

(You can read the full research report on Caterpillar here >>>).

Shares of Morgan Stanley have lost -14.5% in the last six months, underperforming the Zacks Investment Banking industry, which lost -9.8% over the same period. Slowdown in debt underwriting will likely hurt the company's investment banking performance to some extent. Also, elevated expense levels are expected to hurt bottom line growth.

Yet, the company possesses an impressive earnings surprise history, beating the Zacks Consensus Estimate in each of the trailing four quarters. The company’s efforts to strengthen wealth management operations, focus on corporate lending and normalized levels of trading activities will continue to support revenues. Higher interest rates and tax cuts will likely lead to increased profitability.

(You can read the full research report on Morgan Stanley here >>>).

Walmart’s shares have underperformed the Zacks Supermarkets industry over the past year (11.0% vs. 13.3%). The company is poised to gain from strong e-commerce initiatives, particularly expansion of online grocery delivery. This, along with efforts to drive brick-and-mortar sales should help the company maintain its sturdy U.S. comps trend. Walmart is also undertaking efforts to improve its International unit, by shifting focus from underperforming regions to profitable countries.

To this end, the company’s recent investment in Flipkart is however expected to dent the bottom line in the near term. Further, investments related to e-commerce initiatives and a compelling pricing strategy have been hurting Walmart’s gross margin – causing its shares to underperform the industry in the past six months.

Nonetheless, the Flipkart deal bodes well for the long term, which along with focus on buyouts, alliances and improved delivery services should help Walmart stand firm against Amazon. Estimates have been stable lately ahead of earnings.

(You can read the full research report on Walmart here >>>).

Other noteworthy reports we are featuring today include Carlisle Companies (CSL), Phillips 66 (PSX) and Marriott International (MAR).

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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>>>

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