Today's Must Read
TJX Companies' (TJX) Sturdy Comps Run to Boost Top Line
Construction Demand, Wirtgen Buy Aid Deere (DE), Costs Ail
Friday, May 24, 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 Medtronic (MDT), TJX Companies (TJX) and Deere (DE).These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Medtronic’s shares have outperformed the Zacks Medical Products industry in the past year, gaining +6.2% vs. +1.2%. Medtronic exited fiscal 2019 on a promising note with better-than-expected fourth-quarter numbers. Barring the Diabetes group, all major business groups contributed to solid top-line growth at CER.
The Zacks analyst thinks that within RTG, the launch of the Mazor X Stealth navigated robotic system is off to a strong start. Diabetes group, although registered a dull quarter this time, the company expects this business to reaccelerate in the first quarter and be accretive to total company growth in fiscal 2020. Within CVG, despite ongoing challenges, multiple product lines showed exceptional strength in the quarter.
The 2020 guidance also looks promising. On the flip side, the declining CRHF revenue raises concern for Medtronic. Escalating costs persistently put pressure on gross margins.
Shares of Buy-ranked TJX Companies’ have underperformed the Zacks Discount Stores industry over the past three months, gaining +5.6% vs. a +7.1% increase. However, the Zacks analyst thinks the company is likely to put up an above-average performance in the near term.
The company is set to benefit from robust comps, which have been gaining from continued rise in consumer traffic and strong merchandising policies. These factors along with TJX Companies’ off-price model, strategic store locations and impressive brands have been driving its store and online performance. This was visible in the company’s first-quarter fiscal 2020 results, wherein customer traffic rose for the 19th straight time.
Management is encouraged about witnessing continued growth, evident from its raised earnings view. Also, the company’s shareholder-friendly moves reflect its solid financial status. However, the company has been witnessing high wage costs, which along with elevated freight costs are likely to hit EPS growth in fiscal 2020. Also, volatile currency movements pose threats.
Deere’s shares have lost -8.5% year to date, underperforming the Zacks Farm Equipment industry, which has declined -6.5% over the same period. Deere reported year-over-year improvement in both adjusted earnings per share and revenues in second-quarter 2019. While the top line beat expectations, the bottom line missed.
For fiscal 2019, Deere anticipates net sales to increase about 5% year over year and net income at $3.3 billion. The Zacks analyst thinks concerns over the U.S-China trade war, lower commodity prices and delayed planting season in North America led farmers to become cautious about their equipment purchases.
However, the recently announced $16 billion aid program for American farmers impacted by the trade war is likely to boost agricultural equipment sales. Improving construction markets, the Wirtgen acquisition and introduction of advanced technologies in its products will also aid growth. However, raw material cost inflation, elevated expenses and unfavorable foreign currency impact will hurt results.
Other noteworthy reports we are featuring today include Consolidated Edison (ED), Incyte (INCY) and Netapp (NTAP).
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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>>>