Today's Must Read
Expansion Moves Amid Industry Tailwinds to Aid Prologis (PLD)
Dividends & Buybacks Buoy Delta (DAL) Amid Cost Woes
Wednesday, July 17, 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 Southern Company (SO), Prologis (PLD) and Delta Air Lines (DAL). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Outperform-rated Southern Company's shares have outperformed the Zacks Electric Power industry year to date, gaining +26.7% vs +14.8%. The Zacks analyst thinks the stock is poised for further capital appreciation, riding on its healthy earnings growth prospects. It is one of the largest and best-managed electric utility holding companies in the United States, dominating the power business across the southeastern region.
With good rate base growth and constructive regulation, it is expected to generate steady earnings and dividend growth in the coming years through long-term power contracts. Additionally, SO's $12 billion AGL buy has significantly increased its customer base and diversified offerings. Investors have also welcomed the U.S. federal government's approval of $3.7 billion in loan guarantees for the Vogtle nuclear plant in Georgia that will help the utility to reduce its costs.
Shares of Prologis have outperformed the Zacks REIT and Equity Trust industry in the year-to-date period (+38.7% vs. +19.9%). The company has agreed to acquire warehouse owner Industrial Property Trust, in a deal valued at about $3.99 billion, from Black Creek Group.
The Zacks analyst thinks the move will expand the company’s position in key submarkets. Further, backed by high period-end occupancy, Prologis delivered a healthy performance in Q2 and also raised its outlook. In a rising e-commerce market, industrial real estate assets continue to play a pivotal role.
Companies are making immense efforts to improve supply-chain efficiencies, spurring demand for logistics infrastructure and efficient distribution networks. Given Prologis’ balance-sheet strength, it remains well poised to capitalize on this favorable trend. But rising supply and protectionist trade policies are key concerns.
Delta Air Lines’ shares have gained +26.6% year to date, outperforming the Zacks Airline industry's +14.3% increase. Delta delivered an impressive performance in second-quarter 2019, wherein earnings and revenues surpassed expectations. Both the metrics also improved year over year.
Similar to the past few quarters, quarterly results were aided by uptick in passenger revenues on account of strong demand for air travel. Moreover, Delta raised its current-year earnings projection. Also, the company’s board approved a 15% dividend hike. The Zacks analyst thinks initiatives to reduce debt are also impressive.
However, increase in operating expenses mainly due to high non-fuel unit costs remain a concern. Notably, non-fuel unit costs are projected to increase 1-2% in the third quarter. Moreover, technological glitches have been hurting Delta's operations quite regularly.
Other noteworthy reports we are featuring today include eBay (EBAY), Occidental Petroleum (OXY) and Dollar General (DG).
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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>>>