Today's Must Read
UPS Buoyed by e-Commerce Growth, High Capex a Woe
Loan Growth Supports U.S. Bancorp (USB), Cost Woes Linger
Monday, January 14, 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 Disney (DIS), United Parcel Service (UPS) and U.S. Bancorp (USB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Disney’s shares have increased +0.1% over the past year, outperforming the Zacks Media Conglomerates industry’s -1.2% decline in that same time period. The Zacks analyst thinks blockbuster performance of Disney movies at the box office is aiding Studio segment growth.
Moreover, the company’s top line is expected to benefit from the solid line-up of big budget movies slated to be released over the next 18 months. Solid content portfolio at ESPN+ as well as impressive Disney+ original content line-up, expected to release in 2019, is also expected to win subscribers rapidly. However, Disney’s ongoing investments in its technology platform are expected to keep margins under pressure.
Additionally, higher programming costs at ESPN remains a concern. Higher labor-related costs and softness experienced in tourism and consumer confidence in China are likely to impact Parks & Resorts segment in the near term.
Shares of United Parcel Service have outperformed the Zacks Transportation - Air Freight and Cargo industry over the past year, losing -27% vs. -30.9%. The Zacks analyst expects United Parcel Service's bottom line in the fourth quarter of 2018 to be hurt by high costs. Detailed results should be out on Jan 31.
UPS' high capital expenditures are pushing up costs. For 2018, capital expenditures are projected between $6.5 billion and $7 billion, representing an increase in excess of 100% from 2016 levels. With the company having Chinese exposure, trade disputes between United States and China also represent a headwind for UPS.
On the other hand, robust e-commerce growth is a major tailwind for the company and should aid the top line in the fourth-quarter. The company’s efforts to reward investors through share buybacks and dividend payouts are also impressive. Additionally, the current tax law is a boon for U.S. based transportation companies like UPS.
U.S. Bancorp’s shares have outperformed the Zacks Major Banks industry over the past six months, losing -7.5% vs -13.5%. The company possesses an impressive earnings surprise history, beating expectations in all the trailing four quarters. Earnings estimates have remained stable lately, ahead of the company's fourth quarter 2018 results.
The Zacks analyst thinks U.S. Bancorp's prospects will likely get support from its solid business model, core franchise, lower tax rate, rising interest rate and diverse revenue streams. Also, its organic growth remains solid and will likely benefit from the improving economic scenario.
U.S. Bancorp remains well poised to grow through acquisitions. However, escalating expenses due to its ongoing investments in technology and likely increase in legal expenses remain concerns.
Other noteworthy reports we are featuring today include State Street (STT), Constellation Brands (STZ) and Tyson Foods (TSN).
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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>>>