Today's Must Read
P&G's (PG) Productivity & Cost Savings Plan Aids Margins
Focus on Core Operations Aid Citigroup (C), Legal Woes Linger
Wednesday, October 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 Cisco (CSCO), 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 Cisco's shares have outperformed the Zacks Computer Networking industry over the past year, gaining +46.6% vs. +42.9%. The Zacks analyst thinks Cisco is benefitting from expanding footprint in the rapidly growing security market which represents a significant growth opportunity.
Strong contributions from acquisitions, security, Infrastructure Platforms and applications remains a positive. Strengthening collaboration portfolio which now includes Webex Teams and AI-based Accompany bodes well. Partnerships with Telenor, Apple, IBM, Microsoft and Google Cloud are positive. Divestiture of a portion of Cisco’s NDS video assets is likely to mitigate the sluggishness witnessed in other product segment.
Further, Duo Security acquisition should help the company expand its IT and data security businesses, which will only become more vital going forward. However, weakness in switching and routing is a headwind. Ongoing transition to subscription-based model will continue to hurt the top line.
Shares of Buy-ranked Procter & Gamble have gained +8.2% over the past three months, outperforming the Zacks Soap and Cleaning Materials industry, which gained +4.6% over the same period. The Zacks analyst thinks that this increase was driven by an impressive earnings surprise history, which continued in fourth-quarter fiscal 2018, marking its 13th consecutive beat.
The company’s focus on product improvement, packaging and marketing initiatives, and productivity cost-savings plan bodes well. 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, its likely impact on demand and consumption is a worry. Also, softness in the grooming and baby care businesses remains a concern.
Citigroup’s shares have outperformed the Zacks Major Regional Banks industry over the past six months (+3.5% vs. -0.9%). Further, the company possesses an impressive earnings surprise history, beating expectations in all the trailing four quarters.
The Zacks analyst thinks the company’s restructuring and streamlining efforts, strategic investments in core business, lower tax rate and expense management will likely support profitability. The recent capital plan approval reflects strong capital position.
Yet several issues, including litigation burden, are cause for concern. Nevertheless, with rising rates, margin pressure seems to be easing. Notably, the bank expects third-quarter 2018 fixed income and equity trading revenues likely to be flat to slightly higher on a year-over-year basis.
Other noteworthy reports we are featuring today include IBM (IBM), Qualcomm (QCOM) and General Electric (GE).
Best Electric Car Stock? You'll Never Guess It.
Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think!
Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.
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>>>