Tuesday, April 2, 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 ExxonMobil (XOM), PayPal (PYPL) and Starbucks (SBUX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
ExxonMobil’s shares have underperformed the Zacks Integrated International Oil industry (+19.1% vs. +11.3%) in the past three months. ExxonMobil has a leading position in the energy industry owing to its size and diverse asset base, both in terms of business mix and geographical footprint.
With a stable cash position, the company’s balance sheet is one of the best in the industry. The Zacks analyst thinks that this has allowed ExxonMobil to reward stockholders with a 6.3% average annual dividend hike over the past 35 years.
The company owns some of the most prolific upstream assets globally along with the largest global refining operations. Notably, with two fresh offshore oil discoveries in Guyana, ExxonMobil recently completed 12 key discoveries in the Stabroek Block. Also, the company recently made massive natural gas discovery in Glaucus-1 well, located off the coast of Cyprus.
However, persistent weakness in chemicals margins and decline in seasonal demand for gasoline are major headwinds for ExxonMobil. The company’s exit from a joint venture in Russia is also cause for concern.
(You can read the full research report on ExxonMobil here >>>).
Shares of Buy-ranked PayPal have outperformed the Zacks Internet Software industry in the past year (+41.5% vs. +27.1%). The Zacks analyst thinks PayPal’s portfolio strength remains its key growth driver. Venmo’s improving monetization efforts and its increasing adoption rate across various platforms are aiding the company’s user base.
Further, strong momentum of the company in international markets, especially in India and Japan remains a major positive. Also, accelerating transaction revenues are driving the top-line growth. Additionally, rising active customer accounts, owing to contributions by acquisitions of Hyperwallet and iZettle continues to act as a tailwind. Also, strategic partnerships are expected to continue aiding business growth of PayPal.
However, weak eBay performance and challenging macroeconomic environment in China and the UK induced the issuance of lower-than-expected revenue guidance for Q1. This remains a concern.
(You can read the full research report on PayPal here >>>).
Buy-ranked Starbucks’ shares are up +33.3% over the past six months, outperforming the Zacks Food & Restaurants industry, which is up +17.4% over the same period. The Zacks analyst thinks robust Americas and China comparable store sales bode well.
Starbucks' business in China is rapidly growing due to innovative store designs, local product innovations and the success of MSR program. Also, the company’s operating fundamentals such as solid global footprint, successful innovations, best-in-class loyalty program and digital offerings are encouraging.
Again, digital initiatives like mobile order/pay and delivery services can further stimulate robust sales trends. Starbucks' partnership with Nestle SA will also drive growth. However, operating margin contraction over the past few quarters has been a major concern.
Being a retail restaurant, Starbucks is dependent on consumer discretionary spending environment. Estimates for current quarter and year have been stable over the past 30 days.
(You can read the full research report on Starbucks here >>>).
Other noteworthy reports we are featuring today include Southwest Airlines (LUV), McCormick (MKC) and Interactive Brokers (IBKR).
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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>>>
Today's Must Read
Stabroek Block Aids ExxonMobil (XOM), Chemical Margins Weak
PayPal (PYPL) Benefits From Rising Total Payment Volume
Robust Americas & China Performance to Drive Starbucks (SBUX)
Renal Care Unit Aids Baxter (BAX) Amid Cyclophosphamide Issues
Baxter's Renal Care segment has significantly driven its topline. However, the Zacks analyst is pessimistic about headwinds related to generic competition for its cyclophosphamide drug.
Solid Product Portfolio Aids Corning (GLW) Amid Price Fall
Per the Zacks analyst, Corning is well poised to benefit from technologies aligned to key industry trends and cohesive product portfolio, despite facing price decline in the Display Technologies unit.
Technology, DARTs Aid Interactive Brokers (IBKR), Costs Rise
Per the Zacks analyst, Interactive Brokers' focus on developing of proprietary software will continue to support revenues and daily average revenue trades (DARTs). But rising costs remains a concern.
Energizing the Future Plan to Aid FirstEnergy's (FE) Growth
Per the Zacks analyst, FirstEnergy's modernization drive and ambitious Energizing the Future plan will add to the company's overall operational strength.
Improved Volume Drives Cboe Global (CBOE), High Expenses AIl
Per the Zacks analyst, Cboe Global is poised for growth on the back of trading volume growth fueling transaction fees.
Expansions Support People's United (PBCT), High Costs a Woe
Per Zacks analyst, high interest rates, rising loan balances and efforts to expand into new markets are likely to support People's United's bottom line.
Gap's (GPS) Robust Omni-Channel Efforts to Fuel Top Line
Per the Zacks analyst, Gap is enhancing its omni-channel capabilities by increasing online presence across all its brands.
McCormick's (MKC) CCI Program to Continue Boosting Savings
Per the Zacks analyst, McCormick's focus on boosting savings via the Continuous Improvement (CCI) program has been encourgaing. The program wil likely result in savings of $110 million in fiscal 2019.
Madison Square (MSG) Rides on Acquisitions & Partnerships
Per the Zacks analyst, Madison Square is strengthening its brand footprint and revenue growth through major partnerships and acquisitions. It also helps the company expand its business.
Content Strength, Subscriber Growth Aids Lions Gate (LGF.A)
Per the Zacks analyst, Lions Gate's strong content slate and continuing investments in premium content are expected to drive subscriber growth and reduce churn.
Southwest's (LUV) Q1 Likely to be Hurt by TRASM & Cost Woes
The Zacks analyst is concerned about the bearish Q1 unit revenue projection due to headwinds like the MAX 8 groundings. As a result of the flight cancellations, costs are likely to increase in Q1.
Infineon (IFNNY) Hurt by Increasing Investments & High Debt
Per the Zacks analyst, Infineon's need for large capital investments in retaining a competitive cost position is likely to limit margin expansion. Also, its leveraged balance sheet is a niggling woe.
High Expenses & Supply Chain Issues Hurt Tesla (TSLA)
Per the Zacks analyst, huge investment in Model 3, Gigafactory & Supercharger infrastructure is adding to Tesla's expenses. Also, the supply chain issues are limiting its ability to raise production.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
McCormick & Company, Incorporated (MKC) : Free Stock Analysis Report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
Interactive Brokers Group, Inc. (IBKR) : Free Stock Analysis Report
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