Today's Must Read
EOG Resources (EOG) to Gain From Oil-Rich Eagle Ford Acreage
Favorable Budget, Overseas Expansion Boost Northrop (NOC)
Thursday, May 9, 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 Cigna (CI), EOG Resources (EOG) and Northrop Grumman (NOC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Cigna’s shares have lost -8.5% over the past year, underperforming the Zacks Multi-Line Insurance industry, which has declined -1.2% over the same period. However, Cigna’s first-quarter earnings surpassed expectations by 4.3% but declined 5.1% year over year. The Zacks analyst thinks Cigna’s acquisition of Express Scripts is likely to fuel long-term growth.
The company’s expanding international business provides diversification. Its group disability and other businesses are expected to perform well, led by personalized and affordable solutions. Its growing membership has aided revenue growth.
Along with top-line growth, Cigna has been able to maintain bottom-line profitability as well. Its strong capital position enables investment in business. An increase in leverage might pose financial risks. Rise in operating expenses may weigh on margins.
Shares of Buy-ranked EOG Resources have declined -21% over the past year, outperforming the Zacks Oil & Gas E&P Industry, which has slumped -33.5% over the same period. EOG Resources holds premium acreages in the Permian, Bakken and Eagle Ford shale plays, among others, where it has identified 9,500 premium undrilled wells that could lend access to 9.2 billion barrels of oil equivalent estimated potential reserves.
In the Eagle Ford alone, EOG Resources has identified 2,300 locations that will drive the firm’s oil production. The Zacks analyst likes the fact that the company has been focused on consistently returning cash to shareholders.
Taking into account the latest quarterly dividend hike, the upstream energy player has managed to hike dividend payments by almost 72% since 2017. Notably, the upstream energy firm recently reported strong first-quarter 2019 earnings, thanks to higher oil equivalent production volumes. Moreover, the company emphasizes on reducing cash operating expenses and expects to lower costs through 2019, thereby boosting its bottom line.
Buy-ranked Northrop Grumman’s shares have underperformed the Zacks Aerospace Defense industry over the past year, losing -11% over the period versus the industry’s -1.4% decline. Northrop Grumman ended first-quarter 2019 on a mixed note. While its earnings surpassed expectations, revenues missed the consensus mark. However, results remained impressive on a year-over-year basis.
The Zacks analyst likes the fact that as a major U.S. defense contractor, Northrop Grumman continues to enjoy a strong position in the Air Force, Space & Cyber Security programs. In a bid to boost its growth trajectory, Northrop Grumman completed the acquisition of rocket-maker Orbital ATK for $9.2 billion last year. Increasing international opportunities are expected to boost the company’s margin growth.
Currently, the company is getting ready to move into full-rate production for Triton. However, it continues to incur high operating expenses on account of increasing product costs. This may disappoint investors.
Other noteworthy reports we are featuring today include Sherwin-Williams (SHW), Baxter (BAX) and Eaton Corp (ETN).
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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>>>