Today's Must Read
New Projects, Regulated Assets Aid Dominion Energy (D)
Volume Growth, Cost Cuts Buoy Norfolk Southern (NSC)
Wednesday, November 21, 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 TJX Companies (TJX), Dominion Energy (D) and Norfolk Southern (NSC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked TJX Companies' shares have outperformed the Zacks Discount Stores industry over the past year, gaining +32.7% vs a +20.6% increase, courtesy of its impressive comps record. Comps have been gaining from continued rise in consumer traffic and strong merchandising policies.
The Zacks analyst thinks these factors along with TJX Companies’ off-price model, strategic store locations and impressive brands have been driving its store and online performance. This was visible in the company’s third-quarter fiscal 2019 results, wherein the top and bottom lines grew year over year and beat estimates, and customer traffic rose for the 17th straight time.
The company began the fourth quarter on a strong note, which along with its constant sales-driving efforts, solid holiday season prospects and expected market share gains led to a raised view. However, the company has long been witnessing high wage costs, which along with elevated freight costs are expected to hurt margins in fiscal 2019. Also, currency woes pose threats.
Shares of Dominion Energy have gained +17% over the past six months, outperforming the Zacks Electric Power industry, which has increased +6.9% over the same period. The company’s third-quarter earnings surpassed expectations, courtesy of strong contribution from the Cove Point Liquefaction project.
The Zacks analyst thinks Dominion Energy is benefiting from its regulated growth projects and synergies from Questar’s acquisition. The company’s expansion of electric transmission, natural gas facilities and midstream assets are strong positives. Its merger deal with SCANA received the approval of North Carolina Utilities Commission and is likely to be immediately accretive to earnings.
However, any delay in ongoing capital projects could adversely impact profitability of the company. Reduction in solar investment tax credits and share dilution may affect its future results. The company and its gas unit’s dependency upon third-party producers for natural gas supply increases risks.
Buy-ranked Norfolk Southern’s shares have outperformed the Zacks Rail industry (+25.9% vs. +16.7%) as well as fellow railroad operator Union Pacific (+20.1%) over the past year due to multiple tailwinds. The Zacks analyst thinks the company is benefiting significantly from volume growth.
Norfolk Southern's efforts to reduce costs are also impressive. In fact, operating ratio is constantly improving primarily due to its cost reduction initiatives. A low effective tax rate is boosting the company’s bottom-line performance. Norfolk Southern’s efforts to reward its shareholders through dividends and buybacks are commendable as well.
The Zacks Consensus Estimate for current-year earnings has been revised upward to the tune of 1.5% over the last 60 days, highlighting positivity surrounding the stock. However, high operating expenses mainly due to escalating fuel prices raise concerns. Additionally, its high debt levels are worrisome.
Other noteworthy reports we are featuring today include Sepmra Energy (SRE), Sinopec (SNP) and Eversource Energy (ES).
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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>>>