Today's Must Read
Cost Savings Efforts Support BNY Mellon (BK) Amid Low Rates
Cost-Cuts Aid Canadian Pacific (CP) Amid Volume Softness
Wednesday, January 15, 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 Estee Lauder (EL), Bank of New York - Mellon (BK) and Canadian Pacific Railway (CP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Estee Lauder’s shares have outperformed the Zacks Cosmetics industry over the past year (+72.3% vs. +58.6%). The Zacks analyst believes that the company has been gaining from growth across most brands and sales channels. The trend continued in first-quarter fiscal 2020, wherein both top and bottom lines surpassed estimates and rose year on year.
Performance was supported by growth in emerging markets, travel retail and online sales. Further, management provided an optimistic view for fiscal 2020. However, the company is witnessing certain headwinds such as soft retail trends in the United States and the U.K., costs related to Brexit and tariff impacts in China.
Additionally, challenges in Hong Kong’s retail environment are expected to continue through fiscal 2020. Moreover, adverse currency movements are a concern.
Shares of BNY Mellon have gained +14.8% in the past three months against the Zacks Major Regional Banks industry's rise of +12.6%. The Zacks analyst believes that global diversification efforts and prudent cost management initiatives will aid the bank’s financials.
The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Moreover, earnings estimates have been going up ahead of its fourth quarter 2019 results.
Impressive capital-deployment actions reflect a strong balance sheet position. Yet, the Federal Reserve’s accommodative monetary policy along with reduced client activities and low volatility are likely to hurt revenues going forward. Concentration risk arising from significant dependence on fee-based revenues could alter BNY Mellon’s financial position if there is any change in individual investment preferences.
Canadian Pacific Railway's shares have gained +6.3% over the past six months against the Zacks Rail industry's rise of +0.9%. The Zacks analyst believes that this was mainly due to prudent cost management. With consistent cost containment, the company’s operating ratio has been improving.
Its measures to add shareholder value are also appreciative. Under a normal course issuer bid (for which it received acceptance in December 2019), the company can purchase up to 4.8 million shares. Canadian Pacific’s buyout of Central Maine & Quebec Railway is a further positive.
However, Canadian Pacific experienced weak volumes in the fourth quarter amid macroeconomic headwinds and geopolitical tensions. Moreover, poor harvest weather in Canada is hurting grain volumes significantly. The company’s high debt levels and capital expenditures also add to its woes. Capex is projected to have been C$1.6 billion in 2019.
Other noteworthy reports we are featuring today include AvalonBay (AVB), McKesson (MCK) and Ameriprise Financial (AMP).
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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>>>