Today's Must Read
Robust Demand for z14 Mainframe & Power Products Aids IBM
Texas Instruments (TXN) Banks on Analog Products Amid Risks
Tuesday, September 18, 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 Walmart (WMT), IBM (IBM) and Texas Instruments (TXN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Walmart’s shares have outperformed the Zacks Supermarkets industry over the past three months (+13.4% vs. +12.9%), owing to its focus on strengthening e-commerce and store operations. The Zacks analyst thinks these factors helped the company retain its sturdy comps trend in second-quarter fiscal 2019, wherein earnings and sales grew and beat the consensus mark.
Notably, U.S. comps recorded highest growth in more than 10 years. Further, e-commerce sales surged, courtesy of strong Walmart.com and online grocery performances. These factors encouraged management to raise view. Also, Walmart is making efforts to improve its International unit, by shifting focus to profitable countries. To this end, the company’s investment in Flipkart is however expected to dent the bottom line in the near term.
Further, transportation costs and a compelling pricing strategy have been hurting Walmart’s gross margin for a while. Nonetheless, the Flipkart deal bodes well for the long term and should help the company stand firm against Amazon.
Shares of Buy-ranked IBM have underperformed the broader market on a year-to-date basis, losing -3.6% vs. the S&P 500’s +8% gain. IBM provides advanced information technology solutions, including computer systems, software, storage systems and microelectronics.
The Zacks analyst thinks the company benefits from strong demand for z14 Mainframe and Power products. Moreover, IBM’s improving position in the cloud, security and analytics bodes well. Also, accretive acquisitions have expanded IBM’s product portfolio into higher-growth segments, such as cloud computing, AI and Big Data.
Further, IBM’s advanced blockchain, cloud; machine learning ("ML") capabilities, among others poises its offerings well to gain robust adoption. However, strategic imperatives will take some more time to report meaningful growth and offset weakness in the traditional business. IBM’s ongoing heavily time-consuming business model transition to cloud continues to hurt the stock.
Texas Instruments’ shares have gained +19.5% over the past year, underperforming the Zacks General Semiconductor industry which has gained +27.4% over the same period. The Zacks analyst thinks Texas Instruments is currently benefiting from its strength in automotive and industrial end-markets.
The company continues to prudently invest its R&D dollars in several high margin, high-growth areas of the analog and embedded processing markets. This is gradually increasing its exposure to industrial and automotive markets, while reducing exposure to volatile consumer/computing markets. Margins are also expanding on a secular trend in these two markets.
Further, growing 300-millimeter Analog output are aiding the company’s manufacturing efficiencies. Continuous dividend hike is a big positive. However, increasing competition, unfavorable currency effect and a high debt load remain concerns.
Other noteworthy reports we are featuring today include Abbott (ABT), Wells Fargo (WFC) and Lockheed Martin (LMT).
5 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2018 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. R
eports suggest it could save 10 million lives per decade, which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 5 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains.
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>>>