Today's Must Read
Productivity Savings Fuel Mondelez's (MDLZ) Margins
Volumes, Dividends & Buybacks Buoy Norfolk Southern (NSC)
Friday, November 9, 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 Alibaba (BABA), Mondelez (MDLZ) and Norfolk Southern (NSC). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
Alibaba’s shares have underperformed the Zacks Internet Commerce industry year to date, declining -13.5% vs. +6.1%. The Zacks analyst thinks that Alibaba continues to benefit from its core e-commerce and retail business. Its strong momentum in both domestic as well as international market remains positive.
Moreover, the company’s New Retail strategy is aiding growth in its Tmall Import, Hema fresh food grocery business and Intime Department Stores. Alibaba’s strengthening cloud business with its expanding customer base will continue to drive its top-line growth.
However, rising competition from domestic as well as foreign e-commerce companies poses risk. Additionally, the company’s increasing investments and macro headwinds in China are major concerns.
Shares of Mondelez have gained +4.7% in the past three months, outperforming the -1.7% decline of the Zacks Food Preparation industry. The Zacks analyst thinks that the company has been gaining from a strong earnings history.
The company’s third-quarter 2018 bottom-line performance was backed by benefits from taxes, fewer outstanding shares and operating gains. Notably, the quarter marks the company’s seventh straight quarter of positive bottom-line surprise. Further, Mondelez has been gaining from improved pricing and productivity savings. In fact, such factors fueled margins during the third quarter.
Apart from these, the company continues to focus on strategic acquisitions and innovations. It has also been gaining from continued business growth in the emerging markets, specifically India and China.
On the flip side, sluggish sales in North America, stemming from operational challenges, dented the company’s performance during the third quarter. This, combined with negative impacts of currency, continue to remain as threats.
Buy-ranked Norfolk Southern’s shares have outperformed the Zacks Rail industry (+35.5% vs. +23.9%) as well as fellow railroad operator Union Pacific (+30.6%) over the past one year. Norfolk Southern reported better-than-expected earnings per share and revenues in the third quarter of 2018. Both metrics also improved year over year.
The Zacks analyst thinks the company is benefiting from volume growth. Norfolk Southern's efforts to reduce costs are also impressive. Meanwhile, operating ratio is constantly improving mainly owing to its cost reduction initiatives.
Norfolk Southern’s efforts to reward its shareholders are impressive, too. In fact, the positivity revolving around the stock is evident from the Zacks Consensus Estimate for current-year earnings, which moved north approximately 1.2% over the last 60 days. However, its high debt levels and operating expenses raise concerns.
Other noteworthy reports we are featuring today include Petrobras (PBR), Emerson Electric (EMR) and Sprint (S).
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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>>>