Thursday April 20, 2017
The Zacks Research Daily features the best research output of our analyst team. In today’s write-up, we are featuring analyst reports on 16 major stocks, including reports on IBM (IBM), Abbott (ABT) and Dow Chemical (DOW). These reports have been hand-picked from amongst the 70 or so stock research reports published by our analyst team today. You can see all of today’s research reports here >>
In addition to these stock research reports, we are also giving you a real-time scorecard of the ongoing Q1 earnings season. You can read more about our views about this earnings season in the weekly Earnings Trends report >>> Q1 Earnings Season Off to a Solid Start
Q1Earnings Scorecard (as ofThursday, April 20th)
Including all of this morning’s releases, we now have Q1 results from 82 S&P 500 members that combined account for 21% of the index's total market capitalization. Total earnings for these 82 index members are up +15.4% on +4.9% higher revenues, with 72% beating EPS estimates and 59.8% beating revenue estimates.
This is better earnings and revenue growth performance than we have seen from this group of 82 S&P 500 members in other recent periods, even after adjusting for the strong growth from the Finance sector which has a heavy presence in the results at this stage.
For the Finance sector, we now have Q1 results from 47.7% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Finance companies are up +23.4% from the same period last year on +7.7% higher revenues, with 69.2% beating EPS estimates and 57.7% beating revenue estimates. This is better earnings and revenue growth rate for the Finance sector than we have seen in other recent periods, though most of these stocks have been struggling lately as a result of the downtrend in interest rates.
Excluding the Finance sector, total earnings for the rest of the S&P 500 companies that have reported would be up +8.7% on +3.7% higher revenues from the year-earlier level.
Looking at Q1 as a whole, combining the actual results from the 82 index members with estimates from the still-to-come 418 companies, total earnings are expected to be up +8.8% from the same period last year on +6.2% higher revenues, the best earnings and revenue growth pace in more than two years.
Today's Research Daily features new research reports on 16 major stocks, including IBM (IBM), Abbott (ABT) and Dow Chemical (DOW).
IBM shares did reasonably well this year, but the stock has lost ground following the disappointing quraterly report that appear to have raised fresh doubts about the company's ability to reposition itself for the changing technological landscape. Although IBM has been expanding product portfolio into newer technologies like Blockchain, Quantum computing and Containers through frequent acquisitions, these are still in a nascent stage and will take some time to contribute meaningfully towards top-line growth. However, sluggish IT spending particularly on on-premise and data center hardware and foreign exchange volatility remain concerns. (You can read the full research report on IBM here >>)
Shares of Abbott have gained +8.1% over the last three months, outperforming the Zacks Large-Cap Pharma sector which has gained +5.7% over the same period. Abbott exceeded expectations on both the earnings and sales fronts during the first quarter. The Zacks analyst likes how Abbott has been reshaping its portfolio through strategic acquisitions/divestitures for long-term growth. The St. Jude Medical buyout will complement its cardiovascular devices business. Also, the company’s plans to focus on selling its portfolio in core therapeutic areas. Meanwhile, weakness in the nutrition business in China and sluggish growth in the Venezuelan market is a concern. (You can read the full research report on Abbott here >>)
Dow Chemical shares have gained +7.7% over the past three months, outperforming the Zacks Chemicals Diversified industry (up +3.6% over the same period). The Zacks analyst likes the planned merger with DuPont, which is expected to create significant synergies. Dow should also gain from cost synergies associated with Dow Corning Silicones business and its strategic investments in the U.S. Gulf Coast and the Middle East. Estimates for first-quarter 2017 have also been stable of late. However, Dow’s agriculture business remains affected by depressed crop commodity prices. The company also faces pricing headwinds, feedstock cost pressure as well as weak demand in the energy market. Earnings estimate for the first-quarter 2017 has been stable of late. (You can read the full research report on Dow Chemical here >>)
Other noteworthy reports we are featuring today include MasterCard (MA), Delta Air Lines (DAL) and Exelon (EXC).
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Director of Research
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 >>>
Today’s Must Read
The Zacks analyst is pleased with the company’s Q1 earnings beat. However, the revenue miss raises concerns.
The covering analyst believes Exelon will benefit from its acquisition and customer addition. However, stringent government regulation and price fluctuation in the wholesale markets are headwinds.
The Zacks analyst believes that Valero Energy could capitalize on the surge in gasoline demand due to the summer driving season in the coming days.
According to the covering analyst, intense competition might have driven down the revenues of Rogers Communications in the first quarter 2017.
IDEX started 2017 on a positive note with strong first-quarter 2017 results, driven by healthy year-over-year increase in earnings and revenues that beat the respective Zacks Consensus Estimates.
Cincinnati Financial projects pre-tax cat loss of about $106 million, combined ratio of 99% – 101%, investment income to grow 3%, and P&C net written premiums to increase 7% in the first quarter.
The Zacks analyst thinks Prologis’ better-than-expected Q1 result on revenue growth and occupancy gains is encouraging.
As per the Zacks analyst, organic growth remains a key strength at M&T Bank. Higher revenues in Q1 reflected improving loan and deposit balances. Further, strong capital base is a favorable factor.
The Zacks analyst is impressed by Cliffs’ efforts to cut costs and de-leverage its balance sheet. The company should also gain from recent iron ore supply deals and improving steel market conditions.
The covering analyst thinks Fiserv’s product portfolio, customer base and cost cutting efforts are likely to drive growth. However, stricter regulations and stiff competition remain concerns.
The Zacks analyst thinks high expenses, global economic concerns, soft U.S. business, litigation issues, foreign exchange exposure remain key headwinds for MasterCard.
The covering analyst believes that higher capital expenditure on product development, tough competition, and currency headwinds exerts considerable pressure on both pricing and margins of DENTSPLY.
The Zacks analyst believes Estee Lauder continues to struggle with lackluster retail growth, declining footfall at U.S. department stores, competitive pressure and currency headwinds.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA): Free Stock Analysis Report International Business Machines Corporation (IBM): Free Stock Analysis Report Exelon Corporation (EXC): Free Stock Analysis Report Dow Chemical Company (The) (DOW): Free Stock Analysis Report Delta Air Lines, Inc. (DAL): Free Stock Analysis Report Abbott Laboratories (ABT): Free Stock Analysis Report To read this article on Zacks.com click here.