Today's Must Read
New Branches, Digital Focus Aid BofA (BAC), Trading A Woe
Steady Order Flow to Aid Lockheed (LMT), High Leverage Ails
Wednesday, July 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 Visa (V), Bank of America (BAC) and Lockheed Martin (LMT). 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 +26.7% vs. a +23.3% increase. Visa's earnings beat expectations and grew 14% year over year, led by growth in payments volume, cross-border volume and processed transactions.
The Zacks analyst thinks numerous acquisitions and alliances plus technology upgrades and effective marketing have paved the way for long-term growth and consistent increase in revenues. The acquisition of Visa Europe is a long-term growth driver for the company. Its international business has been expanding and adds diversification benefits.
The company’s strong capital position facilitates business investments. However, high client incentives and expenses are weighing on its operating margin. Foreign exchange volatility imparts instability to the company’s earnings.
Shares of Bank of America have outperformed the Zacks Major Regional Banks in the year-to-date period, gaining +23.2% vs. +17.8%. The bank's earnings have surpassed expectations in each of the trailing four quarters. Its second-quarter 2019 results reflected strong consumer banking performance amid a tough operating backdrop.
The Zacks analyst thinks opening of branches in new regions, improved digital offerings, decent loan growth and efforts to control costs will aid profitability despite the Fed’s dovish monetary policy stance. Its enhanced capital deployment actions are likely to result in a strong balance sheet position.
However, dismal performance of capital markets continues to hurt the company’s investment banking and trading businesses, which in turn will hamper fee income growth. Litigation issues related to business misconduct in the pre-crisis period are likely to lead to higher legal costs.
Lockheed Martin’s shares have gained +11.7% in the past year, outperforming the Zacks Aerospace Defense industry which has gained +5.2% over the same period. Lockheed Martin ended second-quarter 2019 on an impressive note, with both earnings and revenues surpassing their respective expectations.
The Zacks analyst thinks that being the largest defense contractor in the world, the company enjoys strong demand for its high-end military equipment in domestic and international markets. As a result, it witnesses solid order growth. However, the company’s high debt-to-equity ratio shows that the stock is highly leveraged when compared with its industry.
Lockheed Martin also faces intense global competition for its broad portfolio of products and services. Additionally, suspension of the Turkish contract for the F-35 program may hurt the company’s operating results.
Other noteworthy reports we are featuring today include U.S. Bancorp (USB), Morgan Stanley (MS) and Goldman Sachs (GS).
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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>>>