Today's Must Read
Loan Growth Supports U.S. Bancorp (USB), Cost Woes Linger
Enterprise (EPD) Banks on $5B Fee-Based Projects, Debts High
Thursday, March 14, 2019
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 Oracle (ORCL), U.S. Bancorp (USB) and Enterprise Products (EPD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Oracle’s shares have underperformed the Zacks Computer Software industry in the past year, gaining +1.3% vs. +17.3%. Oracle is one of the largest enterprise-grade database, middleware and application software providers. The Zacks analyst thinks the company is benefiting from strong adoption of its cloud-based solutions, comprising Fusion ERP and Fusion HCM, among others. Partnerships with the likes of Accenture are helping the company rapidly expand its cloud-base clientele.
Also, anticipated strong demand for the next-generation autonomous database supported by machine learning will boost competitive position against Amazon Web Services (AWS). Nonetheless, stiff competition in the cloud market from dominant players is anticipated to limit margin expansion.
Lower hardware volumes are anticipated to hurt top-line growth, consequently keeping margins under pressure. Additionally, integration risks from buyouts remain a concern.
Shares of U.S. Bancorp have outperformed the Zacks Major Banks industry over the past six months, losing -4.7% vs -6.7%. The company possesses an impressive earnings surprise history, beating expectations in all the trailing four quarters.
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.
Enterprise Products’ shares have gained +13.6% over the past three months, outperforming the Zacks Oil Production Pipeline MLP industry advanced by +11.9%. Enterprise Products Partners boasts of an extensive network of pipeline that spreads across nearly 50,000 miles.
Importantly, the pipeline network is connected to every major U.S. shale play and provides services to producers and users of commodities by transporting gas, liquids and refined products. The Zacks analyst thinks Enterprise’s $5.1-billion pipeline of fee-oriented midstream projects will enable it to enjoy above-average growth in distributable cash flow (DCF) over the next two years, expanding its distribution coverage ratio.
However, turnaround-related costs from Seminole fractionators hurt Enterprise’s fractionation business. Also, the persistent rise in operating expenses has been affecting the partnership’s bottom line. Enterprise’s balance sheet is more levered than the industry it belongs to. Therefore, the stock warrants a cautious stance.
Other noteworthy reports we are featuring today include Intuitive Sherwin-Williams (SHW), PPL Corp. (PPL) and Cintas (CTAS).
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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>>>