Today's Must Read
Loan Growth Supports Wells Fargo (WFC), Legal Issues Linger
Emphasis on Electric Cars to Aid Toyota (TM) Amid High Capex
Wednesday, January 8, 2020
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), Wells Fargo (WFC) and Toyota Motor (TM). 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 over the past year (+34.4% vs. +27.2%). The Zacks analyst believes that opening branches in new regions, improved digital offerings, decent loan growth and efforts to control costs will aid profitability despite the 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. Moreover, earnings estimates have been moving lower ahead of its fourth quarter 2019 results.
Shares of Wells Fargo have gained +9.4% in the past three months against the Zacks Major Regional Banks industry's rise of +17.7%. The Zacks analyst believes that though the company's investment in the businesses to enhance compliance and risk-management capability seems impressive, Wells Fargo has been slapped with several sanctions, which continues on the CFPB's dissatisfaction with the bank’s progress on fixing risk-management issues.
Earnings estimates have been revised upward ahead of the company's fourth quarter results. Also, the company's earnings surprise history remains impressive, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters.
Strategic acquisitions along with rising loans and deposit balances are impressive. Also, rising costs curb bottom-line expansion. Moreover, lower NII remain a concern.
Toyota Motor's shares have gained +11.5% over the past six months against the Zacks Foreign Automotive industry's rise of +9.4%. The Zacks analyst believes that expanding portfolio of product lines is driving the firm’s sales.
In order to capitalize on the accelerated global shift to electric cars, the auto giant of Japan is deepening focus on developing electric and autonomous vehicles, which will bolster the company’s product competitiveness. Its healthy balance sheet, improving cash flows and investor-friendly moves are other positives.
However, anticipating a slowdown in India, Indonesia and Thailand, the company narrowed its annual vehicle sales target for fiscal 2020. High research and development expenses on advanced technologies for the development of EVs and driverless cars are also likely to dent near-term margins. As such, investors are recommended to wait for a better entry point.
Other noteworthy reports we are featuring today include salesforce.com (CRM), Tesla (TSLA) and PNC Financial Services (PNC).
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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>>>