Today's Must Read
Inflows Aid Blackstone's (BX) Asset Growth, High Costs a Woe
Steady Order Flow, Favorable Budget to Boost Northrop (NOC)
Thursday, July 25, 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 Texas Instruments (TXN), Blackstone (BX) and Northrop Grumman (NOC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Texas Instruments’ shares have gained +35.6% year to date, outperforming the Zacks General Semiconductor industry which has increased +23.2% over the same period. Texas Instrument delivered better than expected second quarter results. However, both earnings and revenues declined on a year-over-year basis.
The company witnessed sluggishness across both the Analog and Embedded Processing segments owing to overall weak demand environment. Nevertheless, Texas Instruments has revised its guidance for 2019 revenues upward despite slowdown in chip sales globally. The Zacks analyst thinks this is likely to help the company in winning shareholders’ confidence.
Moreover, the company remains confident on portfolio strength, efficient manufacturing strategies and optimized capital allocation in growth areas. Further, growing investments in industrial and automotive markets are positives. However, U.S.-China trade tensions is a major headwind.
Shares of Blackstone have outperformed the Zacks Investment Management industry over the past six months, (+48.5% vs. +12.1%). The company’s earnings surpassed expectations in two of the trailing four quarters. Its second-quarter 2019 results benefited from lower expenses, partly offset by a decline in revenues. The Zacks analyst thinks the company remains well positioned to capitalize on its fund-raising ability.
Also, it will likely benefit from revenue mix, inorganic growth efforts and persistent asset inflows. The company has converted itself from a publicly traded partnership to a corporation, which will help it attract more investors for its stock.
However, mounting expenses (mainly due to higher general and administrative costs) will likely hurt bottom-line growth. Moreover, the company’s capital deployment activities look unsustainable which remain a major near-term concern.
Northrop Grumman’s shares have outperformed the Zacks Aerospace Defense industry over the past year, gaining +20.1% over the period versus the industry’s +5% increase. Northrop Grumman ended second-quarter 2019 on an impressive note, wherein both earnings and revenues surpassed their respective expectations.
The Zacks analyst thinks that since it is a major U.S. defense contractor, Northrop Grumman continues to enjoy a strong position in the Air Force, Space & Cyber Security programs. Increasing international opportunities are expected to boost the company’s margin growth.
However, it continues to incur high operating expenses on account of increasing product costs. Such higher operating expenses tend to hurt profit margins. A comparative analysis of its historical EV/EBITDA ratio depicts a relatively gloomy picture that might be a cause for concern.
Other noteworthy reports we are featuring today include Capital One Financial (COF), Biogen (BIIB) and Sherwin-Williams (SHW).
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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>>>