Today's Must Read
Focus on Core Operations and Cost Control Aid Citigroup (C)
International & Online Business Aid NIKE's (NKE) Performance
Tuesday, October 16, 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 JPMorgan (JPM), Citigroup (C) and NIKE (NKE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked JPMorgan’s shares have outperformed the Zacks Major Regional Banks industry year to date (-0.6% vs. -7%). Also, the company has an impressive earnings surprise history, having surpassed expectations in each of the trailing four quarters.
The bank’s third-quarter 2018 results benefited from loan growth, higher interest rates, improvement in equity trading income and lower credit costs. The Zacks analyst thinks expansion into new markets, focus on strengthening the card business, rising rate environment and increasing loan demand will benefit the bank’s financials.
While dismal mortgage banking performance (as originations continue to decline) remains a major concern, lower tax rates and easing of stringent regulations are expected to offer some support. Further, its enhanced capital deployment activities reflect a strong balance sheet position.
Shares of Buy-ranked Citigroup have outperformed the Zacks Major Regional Banks industry over the past six months (-0.7% vs. -3.8%). However, the company possesses an impressive earnings surprise history, beating expectations in all the trailing four quarters.
The company’s third-quarter 2018 earnings reflected high revenues, along with loan growth. Moreover, controlled expenses were witnessed. 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 capital plan approval reflects strong capital position. Yet, several issues, including litigation burden, keep us apprehensive. Nevertheless, with rising rates, margin pressure seems to be easing.
Nike’s shares have gained +44.2% in the past year, outperforming the Zacks Shoes and Retail Apparel industry, which gained +37.5% over the same period, driven by a strong earnings trend stemming from the solid execution of Consumer Direct Offense.
Nike has delivered positive earnings for over three years now, with first-quarter fiscal 2019 marking the 25th straight quarter of earnings beat. Moreover, sales topped estimates for the sixth straight quarter. The Zacks analyst thinks strong progress on Consumer Direct Offense through innovation and focus on direct-to-customer are the key drivers.
Additionally, growth at international and Nike Direct businesses, alongside momentum in North America led to growth in the fiscal first quarter. However, higher SG&A expenses due to increased demand creation expense and operating overheads are likely to remain a drag.
Further, the unfavorable currency environment due to global trade tensions and geopolitical dynamics is likely to weigh on sales. Hence, it provided a soft guidance for fiscal 2019 and the second quarter.
Other noteworthy reports we are featuring today include Constellation Brands (STZ), Chubb (CB) and Marriott (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>>>