Today's Must Read
salesforce (CRM) Rides on Portfolio Strength, Buyouts
Aerospace Segment Drives Honeywell (HON), High Costs Hurt
Friday, May 31, 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 Visa (V), salesforce (CRM) and Honeywell (HON).These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Visa’s shares have outperformed the Zacks Financial Transaction Services industry in the past year, gaining +24.3% vs. a +18.3% increase. The Zacks analyst thinks the company is gaining from consistent growth in payment volumes, cross-border volumes and processed transactions.
Numerous strategic acquisitions and alliances plus technology upgrades and effective marketing have paved the way for long-term growth and a consistent increase in revenues. The acquisition of Visa Europe is a long term growth strategy for the company. Its international business has been expanding and adds diversification benefits.
Visa is well-poised to gain from the growing electronic payment processing and a solid brand name. Its strong capital position facilitates business investments. However, high client incentives and operating expenses weigh on its operating margins. Adverse foreign exchange volatility imparts instability to the company’s earnings.
Shares of Outperform-rated salesforce have gained +7.2% in the past six months, underperforming the Zacks Computer Software industry, which has gained +11% over the same period. However, the Zacks analyst thinks salesforce is benefiting from strong growth across most of its business segments and deal wins in the international market.
Rapid adoption of its diverse cloud offerings given the growing demand for digital transformation remains a key catalyst. The effort to strengthen relationships with cloud companies like Amazon, Google and IBM are a positive. Additionally, strategic acquisitions like MuleSoft, Datorama and Cloudcraze is helping it to deliver strong growth.
However, stiff competition from Oracle and Microsoft is a concern. Currency fluctuations remain a key headwind. Additionally, increasing investments for international expansion and data centers is an overhang on near-term profitability.
Honeywell’s shares have outperformed the Zacks Diversified Operations industry in the past six months, gaining +11.9% vs. a +4.8% increase. The company believes that 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.
The Zacks analyst thinks stronger sales volumes, increased productivity and ongoing actions to boost commercial effectiveness will likely improve near-term profitability. For 2019, Honeywell raised earnings guidance from $7.80-$8.10 to $7.90-$8.15 per share.
However, the stock looks overvalued compared to the industry for the past six-month period. Also, the company is experiencing softness in its productivity products business due to lower volumes of sales in scanning and mobility products. However, rise in debt levels can increase its financial obligations.
Other noteworthy reports we are featuring today include Duke Energy (DUK), Phillips 66 (PSX) and Delta Air Lines (DAL).
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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>>>