Top Analyst Reports for Home Depot, UPS & Occidental Petroleum

Thursday, August 16, 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 Home Depot (HD), United Parcel Service (UPS) and Occidental Petroleum (OXY). 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 >>>

Home Depot’s shares have gained +29.6% over the past year, outperforming the Zacks Retail Building Products industry’s +28% increase. The Zacks analyst thinks that this performance is attributable to its five-year long trend of beating earnings estimates, which continued in second-quarter fiscal 2018.

Moreover, sales reverted to a positive surprise trend after a miss in the last-reported quarter. Results gained from a rebound in the seasonal business that impacted sales in the fiscal first quarter and solid execution. Further, its relentless focus on offering innovative products, boosting interconnected customer experience and driving productivity seems to be paying off. Steady housing market recovery and strong customer demand also remain tailwinds.

Backed by the solid performance in the first half of fiscal 2018, the company raised earnings and sales forecasts for fiscal 2018. However, commodity cost inflation in various categories, including rising raw material and transportation costs as well as recently enacted tariffs are likely to pressure margins.

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

Shares of United Parcel Service have outperformed the Zacks Air Freight and Cargo industry in the last six months, gaining +12.9% vs +7%. Additionally, solid e-commerce growth is a huge positive for the company.

The Zacks analyst is also impressed by UPS' efforts to reward shareholders. To this end, in February 2018, UPS hiked quarterly dividends by 10%. A further uptick in such shareholder-friendly activities cannot be ruled out, in the light of the savings induced by the Tax Cuts and Jobs Act. In fact, UPS' solid free cash flow in second-quarter and the bullish full-year forecast support the possibility of a dividend hike in the near future.

The metric is now expected to be $5 billion in 2018 (previous guidance was between $4.5 billion and $5 billion). However, high operating expenses continue to limit bottom-line growth. Also, UPS' 2018 capex forecast, which is higher than 2017 levels, is expected to weigh on the bottom line.

(You can read the full research report on United Parcel Service here >>>).

Occidental Petroleum’s shares have underperformed the Zacks Domestic Integrated Oil industry in the last six months, gaining +12.9% vs. +15.6%. Occidental Petroleum’s second-quarter earnings missed estimates. However, total revenues beat the same owing to a strong production from Permian Resources coupled with revenue growth from Midstream & Marketing segment.

As oil prices continue to improve, Occidental Petroleum gains from more oil production in the Permian Resources and concentrating on high-margin production region. The Zacks analyst thinks the ongoing capital investment will further strengthen the existing operations of the company. The company generates a stable cash flow and its Chemical plant will further improve the same.

Occidental Petroleum, like other oil and natural gas companies, faces the risks of cost overruns and development interruptions due to delays in drilling and other approvals. Stringent federal and state laws are tailwinds for the company.

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

Other noteworthy reports we are featuring today include Disney (DIS), HSBC Holdings (HSBC) and Blackstone (BX).

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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

Pro Category Sales Boost Home Depot (HD)

E-Commerce, Dividends & Buybacks Buoy UPS Amid High Costs

High-Margin Output, Focus on Permian Aids Occidental (OXY)

Featured Reports

Disney (DIS) Hurt By Rising Investments & Marketing Costs

Per the Zacks analyst, Disney's ongoing investments on its technology platform and higher marketing costs negatively impacted profitability.

Expansion Strategy Boosts Equinix (EQIX) Amid Stiff Competition

Per the Zacks analyst, the IBX expansion strategy will strengthen Equinix's global footprint in the data-center space.

Apache (APA) Buoyed by Alpine High Amid Debt Concerns

While Apache's focus on Permian Basin's Alpine High Play and its plans to enrich the region's midstream prowess bode well, the Zacks analyst is worried over the considerable long-term debt load.

Improving Retention Rate, Pay-TV Resizing Aids DISH (DISH)

Per the Zacks analyst, DISH's excellent customer service is improving retention. Also focus on acquiring and retaining subscribers is paying off.

High Refining Margins Aid HollyFrontier (HFC) Amid Cost Woes

While rising gross margins are boosting the profitability of HollyFrontier's refining segment, the Zacks analyst remains worried about the high operating costs that limit its overall earnings.

Fertilizers Demand, Vale Fertilizantes Drives Mosaic (MOS)

The Zacks analyst believes that Mosaic is well placed to gain from increasing global demand for fertilizers.

Seattle Genetics (SGEN) Expands Adcetris to Face Competition

Per the Zacks analyst, hodgkin lymphoma drug Adcetris has done well since launch. Ongoing label expansion studies on the drug are encouraging.

New Upgrades

Intrexon (XON) Active on Acquisitions, Boasts Robust Pipeline

Per the Zacks analyst, Intrexon's expanding portfolio of technologies has enabled the company to develop a robust pipeline. The company's efforts to growth by acquisitions and ECCs are encouraging.

Blackstone (BX) Poised for Asset Growth Driven by Inflows

Per the Zacks analyst, continued net inflows are likely to aid Blackstone's assets under management. Its diversified products and superiority in the alternative investments space will aid top line.

Robust Cloud Services Revenues Benefit j2 Global (JCOM)

Per the Zacks analyst, j2 Global's focus on expanding its cloud services business, more specifically for the healthcare market, is yielding results.

New Downgrades

Magna (MGA) Hit by High Tariffs & Currency Fluctuations

Per the Zacks analyst, high tariffs by the U.S. on steel, aluminum and other imports from certain countries, have weighed on Magna's profitability. Strengthening dollar has also acted as a headwind.

Escalating Expenses, High Hedging Costs Ail Sun Life (SLF)

Per the Zacks analyst, expenses increasing at faster clip than revenues and high hedging costs are expected to weigh on Sun Life's earnings.

Elevated Expenses to Hurt HSBC Holdings' (HSBC) Profits

Per the Zacks analyst, HSBC Holdings' efforts to grow market share in the U.K. and China, and strengthen digital capabilities globally will likely lead to higher costs, which might hurt bottom line.

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United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
 
Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
 
HSBC Holdings plc (HSBC) : Free Stock Analysis Report
 
The Home Depot, Inc. (HD) : Free Stock Analysis Report
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
The Blackstone Group L.P. (BX) : Free Stock Analysis Report
 
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