Today's Must Read
Permian Resources to Aid Occidental (OXY), Cost Overrun Hurts
General Motors (GM) Rides on Trucks and Crossover Sales
Thursday, November 8, 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 ExxonMobil (XOM), Occidental Petroleum (OXY) and General Motors (GM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
ExxonMobil’s shares have gained +3.9% over the past six months, outperforming the Zacks International Integrated Oil industry, which declined -5.3% over the same period. The Zacks analyst thinks the company has a leading position in the energy industry owing to the size and diversity of its asset base, both in terms of business mix and geographical footprint.
With a stable cash position, the company’s balance sheet is one of the best in the industry. This has allowed ExxonMobil to reward stockholders with a 6.3% average annual dividend hike over the past 35 years. Recently it reported strong third-quarter 2018 results, aided by robust oil and gas prices along with healthier fuel margins. Notably, the company continues to gain on ramped-up oil-equivalent production from Hebron field.
However, turnaround activities at Singapore hurt the company’s Chemical business. Moreover, following the exit from a joint venture in Russia, ExxonMobil is foregoing significant growth opportunities from the region. The company is also facing ongoing investigations regarding climate change, warranting a cautious stance.
Shares of Occidental Petroleum have underperformed the Zacks U.S. Integrated Oil industry over the past year, gaining +7.3% vs. +13.6%. Occidental Petroleum’s third-quarter earnings and revenues surpassed expectations. This upside was primarily driven by an increased output from Permian Resources coupled with revenue growth from Midstream & Marketing segment.
The Zacks analyst thinks that as oil prices continue to improve, Occidental Petroleum gains from more oil production in the Permian Resources and from concentrating on a high-margin production region. Ongoing capital investment will further strengthen the existing operations of the company. The company generates a stable cash flow and its Chemical plant will further improve the same.
However, Occidental Petroleum, like other oil and natural gas companies, faces the risks of cost overruns and development interruptions due to delays in drilling and other approvals. Stringent federal and state laws are tailwinds for the company.
Buy-ranked General Motors’ shares have outperformed the Zacks Domestic Automotive industry over the last three months, losing -1.7% vs. -2.6%. General Motors reported third-quarter earnings and revenues which exceeded expectations and their respective prior-year quarter figures. The quarter witnessed robust performance across all new full-size trucks and crossovers in North America.
Estimates for the current quarter and current year earnings moved upwards in the last seven days. The Zacks analyst likes the company’s capital allocation strategy, initiatives to make its vehicles more advanced, safer and fuel efficient and focus on technology development. Its restructuring activities are also expected to prove beneficial in the long run. Also, the company is raising investment in emerging markets to boost global sales.
Other noteworthy reports we are featuring today include MetLife (MET), Equinix (EQIX) and Digital Realty Trust (DLR).
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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>>>