Today's Must Read
Strategic Initiatives Aid Anthem (ANTM), Rising Costs Hurt
Positive Budget to Aid Northrop (NOC) Amid Increasing Opex
Wednesday, June 5, 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 General Electric (GE), Anthem (ANTM) and Northrop Grumman (NOC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Outperform-rated General Electric’s shares have outperformed the Zacks Diversified Operations industry in the past six months (+29.8% vs. +8.5%). The Zacks analyst thinks company is poised to improve its competence on the back of its portfolio restructuring program. In sync with this, it intends to focus on three core businesses — Aviation, Power and Renewable Energy — and gradually exit all others.
General Electric believes that its solid Aviation segment, driven by strengthening services and military businesses, will boost revenues in the quarters ahead. Also, reduced quarterly dividend rate and reorganization in the Power business are likely to benefit results going forward.
Moreover, growing commercial presence in emerging markets will likely improve near-term profitability. In the past 60 days, the company's Zacks Consensus Estimate for earnings per share has been increased by 5.2% for 2019.
Shares of Anthem have outperformed the Zacks Medical Insurance industry in the past year (up +21.6% vs. -1.9%). The Zacks analyst thinks the company's prudent acquisitions and collaborations complement its organic growth. Its consistently growing top line paves the way for long-term growth.
A diverse product portfolio also helped it enhance its underwriting results. Its strong capital position backs effective capital deployment via share buybacks and regular dividends. A strong outlook for 2019 and growing membership instills investor's confidence in the company. Its first-quarter 2019 earnings of $6.03 per share, surpassed expectations by 2.9% and improved 11.5% year over year on the back of higher membership and expansion of its clinical and specialty services.
However, it has been suffering from high benefit costs and selling, general and administrative expenses. Rising levels of debt is another concern.
Northrop Grumman’s shares have outperformed the Zacks Aerospace Defense industry over the past six months, gaining +24.9% over the period versus the industry’s +5.6% increase. The Zacks analyst thinks 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. Such higher operating expenses tend to put downward pressure on its profit margins. Also, Northrop's EV/EBITDA ratio has remained above the broader sector’s EV/EBITDA ratio of 10.45.
Other noteworthy reports we are featuring today include Walgreens (WBA), State Street (STT) and Honda (HMC).
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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>>>