Top Stock Reports for Shell, PepsiCo & U.S. Bancorp

Friday, July 6, 2018

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 Shell (RDS.A), PepsiCo (PEP) and U.S. Bancorp (USB). 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 >>>

Shell’s shares have gained 30.4% over the last year, outperforming the Zacks Integrated Oil industry, which has gained 21.4% over the same period. The performance is backed by impressive earnings surprise history.

The Zacks analyst thinks Shell’s $50 billion buyout of BG Group has boosted its strong and diversified portfolio of global energy businesses that offers attractive long-term growth opportunities. It has also made Shell the largest LNG producer which would help the company meet the fuel’s growing demand and boost cash flows.

Importantly, the aggressive divestment plans of Shell have streamlined its production and helped in debt reduction. However, at same time the divestment spree has affected the volumes growth. With the production going down as evidenced in the last few quarters, the near-to-medium term outlook remains cloudy. Hence, investors should wait for a better entry point before buying shares.

(You can read the full research report on Shell here >>>).

Shares of PepsiCo have decreased -8.6% year to date, underperforming the Zacks Soft Beverages industry, which has declined -5.3% over the same period. However, PepsiCo is witnessing strong performances in its international divisions, driven by higher revenue growth in the developing and emerging markets.

The Zacks analyst thinks the company is also gaining from its solid brand portfolio, product innovation and strong snacks business. Notably, the company has delivered positive earnings surprise for eight consecutive quarters. However, the consumers’ awareness on health and wellness, alongside new taxes on sugar-sweetened beverages and growing regulatory pressures are affecting CSD sales.

Notably, the company’s NAB division reported dismal results with revenues and operating profit decreasing 1% and 22%, respectively, in first-quarter 2018. Volumes declined 2.5%, led by 4% decline in CSDs and 1% decrease in Non CSDs. Estimates have been going down ahead of second quarter earnings.

(You can read the full research report on PepsiCo here >>>).

U.S. Bancorp’s shares have underperformed the Zacks Major Banks industry over the last six months, losing -9.9% vs -7.1%. However, the company possesses an impressive earnings surprise history, beating expectations in three out of the trailing four quarters.

The Zacks analyst thinks U.S. Bancorp's prospects will likely get support from its solid business model, core franchise, lower tax rate, rising interest rate and diverse revenue streams. Also, the company’s organic growth remains solid and will likely benefit from the improving economic scenario. However, escalating expenses and litigations remain key concerns.

(You can read the full research report on U.S. Bancorp here >>>).

Other noteworthy reports we are featuring today include Twitter (TWTR), Nokia (NOK) and State Street (STT).

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Mark Vickery

Senior Editor

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

Shell (RDS.A) Divestment Spree Buoys Financials, Curbs Output

Emerging Markets Growth to Propel PepsiCo's (PEP) Revenues

Loan Growth Supports U.S. Bancorp (USB), Higher Costs a Woe

Featured Reports

Smooth Business Aids FLIR Systems (FLIR), Economic State Hurts

Per the Zacks analyst, company's streamlined business has led to solid improvements in backlog and net income. However, poor economic state across key operating regions may hamper capital investments.

Petro-Canada Lubricants Buyout Drives HollyFrontier (HFC)

The Zacks analyst believes that the Petro-Canada Lubricants acquisition helps HollyFrontier expand into a high-margin and less competitive business, thereby boosting earnings and cash flow.

Capacity Discipline Aids GOL Linhas (GOL), Fuel Costs Ail

The Zacks analyst likes the company's focus on capacity discipline which should cause improvement in yields. High fuel costs are, however, limiting bottom-line growth.

Electronics Segment Spin-off & Innovation Aid Autoliv (ALV)

Per the Zacks analyst, spin-off of Autoliv's electronics unit creates two isolated entities, capable of serving two different markets.

New Business Wins Aid State Street (STT), Higher Costs a Woe

Per the Zacks analyst, new business wins and rising rates are likely to continue supporting State Street's profitability.

Pool Corporation (POOL) Gains From Existing Pool Business

The Zacks analyst notices that Pool Corporation generates more than half of its gross profits from products related to the maintenance and repair of existing pools.

Endocyte (ECYT) Focuses on Pipeline Amid Competition

Per the Zacks analyst, the company plans to shift its focus on its most promising programs, which include its CAR T-cell SMDC adaptor platform.

New Upgrades

Under Armour's (UAA) DTC Business to Lift Top Line

Per Zacks analyst, Under Armour's focus on direct-to-consumer operations and technology-based fitness business bodes well. Management expects 2018 revenues to rise by low single-digit percentage rate.

LKQ Corporation (LKQ) to Gain from Stahlgruber's Acquisition

Per the Zacks analyst, acquisition of the aftermarket spare parts company, Stahlgruber, will aid LKQ Corporation bolster its presence in the European market and add to its sales growth.

Twitter (TWTR) Drives on Improving User Engagement Level

Per the Zacks analyst, Twitter's focus on making tweeting easier for people and more expressive is helping in improving engagement levels. This is driving ad dollar growth amid stiff competition.

New Downgrades

Nokia (NOK) Margins Remain Weighed Down by Brexit Woes

Per the Zacks analyst, Nokia is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members post the Brexit referendum.

Rising Costs & Forex Volatility Hurt MarketAxess' (MKTX) Shares

Per the Zacks analyst, escalating costs remain a headwind for MarketAxess, which are likely to rise going forward. Its exposure to foreign exchange volatility risk is a concern.

High Freight Costs to Weigh on J.M. Smucker (SJM) Margins

Per the Zacks analyst, J.M. Smucker's margins are likely to remain pressurised by elevated freight expenses. Evidently, the company expects freight headwinds to linger into fiscal 2019.

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U.S. Bancorp (USB) : Free Stock Analysis Report
 
Twitter, Inc. (TWTR) : Free Stock Analysis Report
 
State Street Corporation (STT) : Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
Pepsico, Inc. (PEP) : Free Stock Analysis Report
 
Nokia Corporation (NOK) : Free Stock Analysis Report
 
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