Today's Must Read
Oracle (ORCL) Gains from Cloud Suite Adoption & Partnerships
Volumes, Dividends & Buybacks Buoy Union Pacific (UNP)
Tuesday, March 19, 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 Home Depot (HD), Oracle (ORCL) and Union Pacific (UNP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Home Depot’s shares have gained +11.7% over past three months, underperforming the Zacks Retail Building Products industry’s +13.1% increase. Home Depot boasts a five-year long trend of beating earnings estimates, which continued in fourth-quarter fiscal 2018.
Despite a sales miss in the fiscal fourth quarter, the company has delivered positive sales surprise in eight out of the last 10 quarters. Results gained from strength in both Pro and DIY categories. It also benefited from efforts to provide an interconnected shopping experience to customers, with localized and innovative products, and improved productivity.
The Zacks analyst thinks the Pro segment benefits from efforts to enhance service capabilities, including the new B2B website for the Pros. Moreover, the company outlined a solid view for fiscal 2019 and reaffirmed long-term financial targets.
However, the company has suffered lower-than-expected sales and comps in the fiscal fourth quarter. Tough comparisons, hurricane-related sales gains in the prior year, and unfavorable winter weather hurt comps.
Shares of Oracle have outperformed the Zacks Computer Software industry in the past six months, gaining +6% vs. +3.7%. Oracle reported stellar third-quarter results. 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).
Nevertheless, 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. Also, integration risks from buyouts remain a concern.
Buy-ranked Union Pacific’s shares have outperformed the Zacks Rail industry (+1.4% vs. +0.8%) over the past six months. Union Pacific reported better-than-expected earnings per share and revenues in the fourth quarter of 2018. Both the metrics also increased year over year. Higher freight revenues on the back of volume growth aided top-line growth.
For 2019, the company anticipates volumes to increase in the low single-digit range. The Zacks analyst thinks Union Pacific’s efforts to reward its shareholders are encouraging. Notably, the company has hiked dividends four times since November 2017.
Improvement in operating ratio and low tax rates are added positives. Its efforts to promote safety are noteworthy as well. However, high debt levels and operating expenses are concerns. Escalated capital expenditures are contributing to rise in costs.
Other noteworthy reports we are featuring today include Intuitive Baxter (BAX), Dollar General (DG) and Host Hotels (HST).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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>>>