Today's Must Read
Aerospace Aids Honeywell (HON) Amid Supply Chain Woes
Solid Demand Aids Northrop (NOC), Supply Chain Turmoil Woes
Thursday, November 17, 2022
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 Wells Fargo & Company (WFC), Honeywell International Inc. (HON) and Northrop Grumman Corporation (NOC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Wells Fargo shares have outperformed the Zacks Banks - Major Regional industry over the past six-month period (+9.7% vs. +5.2%). The Zacks analyst believes that the company’s progress on efficiency initiatives propelled expense control and savings, which are likely to support its bottom line in upcoming period. Strength in the deposit balance will aid the bank’s liquidity position. The company’s solid liquidity position will help to meet its debt obligations if the economic situation worsens. Also, capital deployment activities seem sustainable.
However, due to legal hassles, Wells Fargo has been penalized with business restrictions and a monetary fine. Restrictions on asset growth will continue to limit loan expansion ability. A decline in originations might limit mortgage banking income.
Honeywell International shares have gained +2.7% over the year-to-date period against the Zacks Diversified Operations industry’s loss of -16.1%. The Zacks analyst believes that healthy demand, orders and backlog bode well for Honeywell’s growth. Recovery in commercial flight hours is driving revenues at the Aerospace segment, while the Building Technologies segment is benefiting from commercial actions and strength in building products and building solutions. The company’s measures to reward its shareholders through dividends and share buybacks are encouraging.
However, supply chain constraints, labor market challenges and inflationary pressures are hurting the company’s operations. Weakness in the Safety and Productivity Solutions sales due to lower personal protective equipment and warehouse automation volume is an added concern. Also, adverse foreign currency movements are affecting the company’s bottom line.
Northrop Grumman shares have outperformed the Zacks Aerospace - Defense industry over the year-to-date period (+30.5% vs. -1.6%). The Zacks analyst believes that Northrop Grumman has developed into one of the top largest U.S. defense contractors in terms of revenues, with a major platform-centric focus. It continues to witness strong demand for its products, driven by programs like F-35, Triton and SABR radar Global Hawk and the E-2D program. Solid U.S. budgetary provisions make one confident about a solid inflow of contracts from Pentagon for it. It also holds a strong solvency position, at least in the short term. Its shares have outperformed the industry in the past year.
However, a comparative analysis of the stock’s trailing 12-month EV/Sales ratio reflects a relatively gloomy picture that might be a cause of concern. It fears that the continued spread of COVID-19 may cause extended disruption in its supply chain.
Other noteworthy reports we are featuring today include The Travelers Companies, Inc. (TRV), U.S. Bancorp (USB), and GSK plc (GSK).
Director of Research
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>>>