Today's Must Read
Strong Aerospace Segment Drives Honeywell's (HON) Revenues
Solid Balance Sheet, Rising Revenues Aid American Express (AXP)
Monday, April 22, 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 IBM (IBM), Honeywell (HON) and American Express (AXP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
IBM’s shares have underperformed the broader market in the last year, losing -3.8% vs. the S&P 500’s +8.3% gain. The Zacks analyst thinks IBM is benefiting from operating efficiency, cost cutting and lower share count.
Moreover, the company’s improving position in the hosted cloud, security, blockchain and analytics domains bodes well. IBM is witnessing growth in industry verticals like health, retail and banking. Solid adoption of Watson Health and broad-based growth in Payer, Provider, Imaging and Life Sciences domains is notable.
However, the Storage hardware segment is facing stiff competition. Additionally, IBM’s ongoing business model transition to cloud is time-consuming, which is likely to be a headwind. Further, ballooning debt levels have been troubling IBM lately.
Shares of Buy-ranked Honeywell have outperformed the Zacks Diversified Operations industry in the past six months, gaining +12.3% vs. a +6.2% increase. In first-quarter 2019, Honeywell's earnings increased year over year and also exceeded expectations.
The Zacks analyst thinks Honeywell’s strength in its commercial aerospace, warehouse and process automation’s businesses as well as solid demand for its commercial fire and security products will boost revenues in the quarters ahead. Stronger sales volumes, increased productivity and ongoing commercial effectiveness actions will likely improve near-term profitability.
For 2019, Honeywell raised earnings guidance from $7.80-$8.10 to $7.90-$8.15 per share. A strong cash position and focus on rewarding shareholders handsomely through dividends and share repurchases will work in its favor. Also, the company has been witnessing solid activity on the earnings estimate revision front, reflecting bullish sentiment.
American Express’ shares are up +13% over the past year, outperforming the Zacks Financial Miscellaneous Services industry, which has declined -7% over the same period. American Express’ first-quarter earnings beat expectations and grew year over year, led by higher-than-expected billings and loan growth.
The Zacks analyst likes the company’s solid market position, strength in card business and significant opportunities from the secular shift toward electronic payments. It continues to witness strong loan growth and credit metrics. Its expanding presence in the business to business market and investment in technology should drive long term growth. However, it faces an increase in reward expenses, led by enhancements of its U.S. platinum products.
Cost of card member services has been increasing over the past three years and it continued to elevate this year as well, reflecting higher engagement levels across its premium travel services. It has also been witnessing an increase in the provision of loan losses.
Other noteworthy reports we are featuring today include Becton, Dickinson (BDX), CSX Corp (CSX) and Progressive Corp (PGR).
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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>>>