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Research Daily

Tuesday, September 10, 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 Caterpillar (CAT), General Motors (GM) and Citigroup (C). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Caterpillar’s shares have outperformed the Zacks Construction and Mining industry (0.2% vs. 0.1%) in the year-to-date period. The Zacks analyst thinks that Caterpillar’s global machine sales growth rate has been on a downward spiral over the past few months, which is concerning.

Notably, the company’s July global retail sales growth of 4% was marked as the lowest so far this year. The company anticipates earnings per share on the lower end of its guidance of $12.06-$13.06 and sales growth to be modest for 2019. In the Construction Industries segment, North America will likely aid growth while China will be a headwind.

Improving commodity prices will support capital expenditure in the mining sector, which will drive the Resource Industries segment. Investments in expanded offerings and services, and digital initiatives like e-commerce will also fuel growth. Its cost-reduction efforts will help sustain margins despite material cost inflation owing to tariffs.

(You can read the full research report on Caterpillar here >>>).

Shares of General Motors have outperformed the Zacks Domestic Automotive industry over the past six months, gaining 2.5% vs -2%. The Zacks analyst believes that strong demand for profitable trucks and SUVs is aiding General Motors’ revenues.

The company’s hot-selling brands in America like Chevrolet Silverado, Equinox and GMC Sierra are driving the top line. The firm is increasing capacity investment in emerging markets to enhance global sales, and is undertaking several initiatives to make its vehicles more advanced, safer and fuel efficient.

However, high cost of raw materials and rising tariffs amid heightening U.S.-Sino trade tiff may put pressure on the firm’s profitability. As it is, the company’s negative free cash flows and high debt load are causes of worry. Further, frequent recalls act as a headwind. As such, investors are recommended to wait for a better entry point.

(You can read the full research report on General Motors here >>>).

Citigroup’s shares have gained 10.4% over the past six months, outperforming the Zacks Major Regional Banks industry, which has gained 2.6% over the same period.

The Zacks analyst believes that Citigroup’s streamlining efforts, along with strategic investments in core business, bode well for the long term. Also, a declining cost base supports its bottom-line improvement.

Steady capital-deployment activities are also commendable. However, pending litigation issues might keep legal expenses elevated. Further, decline in fee income is a concern for the company. Recently, at an investors' conference, chief financial officer Mark Mason commented that trading and investment banking revenues are expected to decline in third-quarter 2019. Further, NII outlook has also been lowered amid more Fed rate cut expectations.

(You can read the full research report on Citigroup here >>>).

Other noteworthy reports we are featuring today include Eli Lilly (LLY), Northrop Grumman (NOC) and Walgreens Boots Alliance (WBA).

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Mark Vickery
Senior Editor

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>>>

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