Today's Must Read
EOG Resources (EOG) Gains on Eagle Ford, Well Expenses High
Volume Growth, Cost Cuts, Dividends Aid CSX Corp (CSX)
Thursday, August 23, 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 Medtronic (MDT), EOG Resources (EOG) and CSX Corp. (CSX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Medtronic’s shares have outperformed the Zacks Medical Products industry in the last three months, gaining +9.9% vs. +4.3%. Medtronic posted better-than-expected numbers in its first-quarter fiscal 2019.
All major business groups contributed to solid top-line growth at CER, which highlighted sustainability across groups and regions, in addition to displaying successful achievement of synergy targets. The Zacks analyst likes the company’s solid growth trend in the United States after adjusting for the divestitures as well as healthy global acceptance of its advanced therapies.
Also, gradually stabilizing CRHF market holds promise. The company is also focusing on geographical diversification of its businesses. Medtronic is highly positive about its foray into the $1 billion standalone CGM market with its Guardian Connect.
Yet escalating costs and expenses continue to weigh on Medtronic’s bottom line. The company’s 2019 guidance remains conservative on apprehension of significant currency headwind.
Shares of EOG Resources have gained around +38.7% over the past year, outperforming the Zacks Oil & Gas E&P Industry, which has gained +23% over the same period. The company holds premium acreages in the Permian, Bakken and Eagle Ford shale plays where it has identified 17,000 premium wells that could lend access to almost 11.3 billion barrels of oil equivalent estimated potential reserves. In the Eagle Ford alone, EOG identified 7,200 locations that will drive the firm’s oil production.
During 2016 and 2017, almost 50% and 85% of the wells drilled by EOG Resources met the standard of premium wells. Notably, the firm expects almost 90% of the wells to meet the standard in 2018. EOG Resources recently reported strong second-quarter 2018 results, supported by higher oil price realization.
However, the Zacks analyst thinks escalating lease and well operating expenses are hurting the company. Also, limited exposure to international resources is a drag.
Strong Buy-ranked CSX Corporation’s shares have gained +52.4% over the past year, outperforming the Zacks Rail industry, which has gained +34.6% over the same period. The Zacks analyst thinks CSX is being aided by lower costs under the Precision Scheduled Railroading system.
Notably, this system was implemented by the company’s former CEO — E. Hunter Harrison — who expired in December 2017. Designed to improve operational efficiency, the system is being backed by CSX’s current CEO Jim Foote. Also, improvement in operating ratio is in tune with the company’s cost control efforts.
The metric has been steadily declining (lower the value the better) over the past few quarters. Volume growth, efforts to reward shareholders and lower tax rates are added tailwinds. The Zacks Consensus Estimate for current-year earnings improved 9.8% over the last 60 days, reflecting the positivity surrounding the stock. CSX's high debt levels, however, raise concern.
Other noteworthy reports we are featuring today include Analog Devices (ADI), Allstate (ALL) and Autodesk (ADSK).
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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>>>