Today's Must Read
P&G's (PG) Productivity & Cost Savings Plan to Drive Profits
Chevron (CVX) to Gain from Permian Production, Anadarko Buy
Monday, April 29, 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 Amazon (AMZN), Procter & Gamble (PG) and Chevron (CVX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Amazon’s shares have outperformed the broader market in the past year (the stock is up +24.5% vs. the +10.8% increase for the S&P 500 as a whole). The Zacks analyst thinks Amazon continues to ride on its ecommerce dominance. Its aggressive retail strategies, distribution strength and robust Prime remain key catalysts.
Moreover, rapid adoption of Prime owing to its customer benefits and strengthening grocery services is driving its top-line growth. Further, the company’s growing brick and mortar presence is a tailwind. Additionally, Amazon’s continued momentum in AWS remains a major positive. Increasing AWS regions and its growing adoption will continue to aid Amazon’s cloud dominance.
However, first-quarter 2019 revenue guidance remains disappointing. Further, rising cloud competition from the likes of Microsoft Azure and Google cloud is a significant headwind. Also, heavy investment in fulfillment centers is a concern.
Shares of Procter & Gamble outperformed the Zacks Soap and Cleaning Materials industry in the past year, gaining +46.4% vs. +25.7%. The Zacks analyst thinks that this can be attributed to the company’s impressive earnings history. It delivered 16th straight earnings beat in third-quarter fiscal 2019, with sixth sales beat in last seven quarters.
While earnings benefited from its ongoing productivity efforts, strong organic growth with higher shipment volumes and favorable price/mix led to sales growth. Furthermore, management raised its sales guidance for fiscal 2019 and reaffirmed the earnings outlook. The company’s focus on product improvement, packaging and marketing initiatives, and productivity and cost-savings plan too bode well.
However, Procter & Gamble has been witnessing strained margins owing to increased commodity and shipping costs, higher brand investments amid intense competition. Also, adverse foreign currency rates are hurting the company’s top and bottom lines, which may continue in fiscal 2019 as well.
Buy-ranked Chevron’s shares have outperformed the Zacks Integrated Oil industry in the past six months (+5.6% vs. -0.9%). Chevron's Q1 earnings were ahead of analysts' expectations, while upstream production exceeded 3 million barrels per day for the second successive quarter.
The Zacks analyst thinks Chevron’s existing oil and gas development project pipeline is among the best in the industry, targeting volume growth of around 4-7% in 2019 thanks to planned expansion in the Permian Basin. Chevron pumped 55% more out of the West Texas shale play in the quarter compared with the same period last year, with production set to soar in coming years.
The company's recently announced $50 billion Anadarko acquisition looks compelling given the access to potentially lucrative Permian Basin acreage, LNG operations in Mozambique, as well as attractive deepwater infrastructure in the GoM. Additionally, the buyout is expected to improve Chevron’s cash flow profile. Therefore, Chevron is a preferred supermajor to own now.
Other noteworthy reports we are featuring today include United Parcel Service (UPS), General Dynamics (GD) and Raytheon (RTN).
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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>>>