Today's Must Read
Loan Growth Supports Wells Fargo (WFC), Legal Issues Linger
Loan Growth Supports U.S. Bancorp (USB), Cost Woes Linger
Monday, February 24, 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 Coca-Cola (KO), Wells Fargo (WFC) and U.S. Bancorp (USB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Coca-Cola’s shares have outperformed the Zacks Soft Drinks Beverages industry over the past year (+33.8% vs. +21.2%). The Zacks analyst believes that the company’s revenues are benefiting from strength across all segments as well as growth in volume and price/mix.
Its focus on consumer-centric innovation, solid core brand performance and improved execution in the marketplace is aiding performance. Notably, it boasts a robust trend of quarterly performances with top line beat in four straight quarters and bottom line beat in three of the last four quarters.
Innovation and investment in core categories and brands have been the key focus area, which led to the expansion of retail value share. However, it expects adverse currency rates to mar results in 2020. Further, the company expects the coronavirus outbreak in China to hurt organic revenues and earnings per share in first-quarter 2020.
Shares of Wells Fargo have gained +6.1% in the past six months against the Zacks Major Regional Banks’ rise of +21.2%. The Zacks analyst believes that Wells Fargo's revenues remain under pressure owing to lower interest rates and volatile non-interest income. Also, elevated costs, due to rising compensation and benefit expenses, curb bottom-line expansion.
Also, the company's earnings surprise history remains unimpressive, having surpassed the Zacks Consensus Estimate in only two of the trailing four quarters. Notably, Wells Fargo recently entered into a $3 billion settlement with the authorities over its historical fake account opening scandal.
Nevertheless, strategic acquisitions, along with rising loans and deposit balances, are impressive which is likely to aid net interest margin. Moreover, the company's investment in the businesses to enhance compliance and risk-management capability seems encouraging.
U.S. Bancorp’s shares have lost -8.8% over the past three months against the Zacks Major Banks industry’s fall of -1.2%. The Zacks analyst believes that opening branches in new regions, improved digital offerings, decent loan demand and efforts to control costs will aid profitability despite lower interest rates.
Bank of America has an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters. Improved capital markets performance and decent loan growth aided fourth-quarter 2019 results.
Efforts to focus more on consumer banking business have started bearing fruit. The company's enhanced capital deployment actions reflect a solid liquidity position. However, significant dependence on capital markets performance makes us apprehensive, given its cyclical nature. This is likely to hurt the company’s fee income growth, and in turn negatively affect the top line.
Other noteworthy reports we are featuring today include Automatic Data Processing (ADP), TJX Companies (TJX) and Southern (SO).
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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>>>