Today's Must Read
Domain Expertise, Accretive Buyouts Steer Cognizant (CTSH)
Vale (VALE) to Gain from Improved Volumes, Rising Costs Ail
Wednesday, November 7, 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 Walmart (WMT), Cognizant (CTSH) and Vale (VALE). 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 (+14.7% vs. +13.2%), 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.
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 Cognizant have underperformed the Zacks Business Software Services industry year to date (-2.2% vs. +4.7%). Cognizant’s third-quarter 2018 results benefited from its significant exposure to the fast-growing verticals like financial services and healthcare.
The Zacks analyst thinks the company is benefiting from domain expertise as well as its ability to harness the ongoing digital transition. It is also significantly gaining from accretive acquisitions and aggressive share repurchase.
However, the company faces significant geographic, domain and customer concentration risks. Further, lackluster spending by large banks in the financial services sector and stiff competition in the IT services market remains a concern.
Vale’s shares have handily outperformed the Zacks Basic Materials sector over the past year (+49.2% vs. -8%). Vale’s third-quarter 2018 earnings remained flat year over year but beat expectations. Revenues increased around 5% year over year and beat the consensus mark.
Vale expects to meet its full-year 2018 iron ore production guidance of approximately 390 Mt. It also expects to produce iron ore of around 400 Mt for 2019 onwards. The Zacks analyst thinks the company will be able to achieve this target as volumes continue to improve at its S11D mine. Vale will also benefit from its focus on investment in projects like Gelado and Salobo III. Lower debt levels and strong cash generation will also drive growth.
However, Vale's performance will be impacted by rising costs and seasonal factors. Further, exchange-rate fluctuations will hurt Vale's revenues and profitability.
Other noteworthy reports we are featuring today include Arista Networks (ANET), Church & Dwight (CHD) and Ball Corporation (BLL).
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon 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, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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>>>