Today's Must Read
Focus on Pro Customers to Aid Home Depot's (HD) Top Line
Reduced Risk Products to Keep Driving Philip Morris (PM)
Thursday, October 3, 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 Bank of America (BAC), The Home Depot (HD) and Philip Morris International (PM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Bank of America’s shares have outperformed the Zacks Major Regional Banks industry year to date (13% vs. 12.8%). The Zacks analyst believes that opening of branches in new regions, improved digital offerings, decent loan growth and efforts to control costs will support profitability amid Fed’s accommodative monetary policy stance.
Further, efforts to focus more on consumer banking business have started bearing fruits The company's enhanced capital deployment actions reflect 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 its business misconducts in the pre-crisis period are likely to lead to higher legal costs.
Shares of Home Depot have gained 12.5% in the past six months, outperforming the Zacks Retail Building Products industry’s rise of 5.8% over the same period. The Zacks analyst believes that this was made possible by a positive earnings surprise trend recorded for more than five years, which continued in second-quarter fiscal 2019.
Earnings benefited from progress on strategic investments as well as a favorable U.S. consumer backdrop and a steady housing market. Meanwhile, the company’s top line lagged estimates but improved year over year on robust comps performance. Its efforts to provide an interconnected shopping experience, with innovative products and improved productivity, position it well for growth.
Despite these gains, lumber price deflation remained a drag on the company’s sales and comps in the fiscal second quarter. Further, it slashed its sales and comps view for fiscal 2019 on lumber price deflation and fears of potential impact of the newly enacted tariffs.
Philip Morris’ shares have lost 4.9% in the past three months, compared with the Zacks Tobacco industry’s decline of 8.9%. The Zacks analyst believes that a sturdy bottom-line trend along with efficient pricing and gains from growth of IQOS in the RRPs arena has been boosting the stock.
These upsides had a positive impact on second-quarter results, wherein earnings and revenues beat the Zacks Consensus Estimate. Also, earnings improved year on year. Further, management raised view for 2019.
However, persistent softness in the cigarette unit is weighing on Philip Morris’ top-line performance. Cigarette shipment volumes are expected to continue declining in 2019. The unit is being weighed down by stringent policies and fading consumer interests. Moreover, unfavorable currency movements are a threat.
Other noteworthy reports we are featuring today include NextEra Energy (NEE), AstraZeneca (AZN) and Eli Lilly (LLY).
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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>>>