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 20^th)

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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Sheraz Mian

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

IBM Corp (IBM) Q1 Earnings Top Estimates, Revenues Miss

Abbott (ABT) Q1 Results Top Estimates, Alere Issue Resolves

Dow (DOW) Poised on Cost, Portfolio Actions Amid Headwinds

Featured Reports

Delta Air Lines (DAL) Q1 Earnings Beat, Revenues Miss

The Zacks analyst is pleased with the company's Q1 earnings beat. However, the revenue miss raises concerns.

Exelon (EXC) gains from Acquisition, Wholesale Price a Woe

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.

Valero Energy (VLO) to Gain from Higher Gasoline Demand

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.

Rogers Communications (RCI) Q1 Earnings Beat, Revenues Miss

According to the covering analyst, intense competition might have driven down the revenues of Rogers Communications in the first quarter 2017.

IDEX (IEX) Comfortably Beats on Q1 Earnings, Raises View

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 (CINF) Estimates Q1 Catastrophe Loss

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.

Prologis (PLD) Tops Q1 FFO, Supply Rise to Cut Growth Tempo

The Zacks analyst thinks Prologis' better-than-expected Q1 result on revenue growth and occupancy gains is encouraging.

New Upgrades

M&T Bank (MTB) Q1 Results Reflect Improving Revenue Trends

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.

Cliffs (CLF) Well Placed on Cost & Debt Cuts, Supply Deals

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.

Fiserv's (FISV) Innovative Product Portfolio to Drive Growth

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.

New Downgrades

MasterCard (MA) Hurt by High Expense, Soft U.S. Business

The Zacks analyst thinks high expenses, global economic concerns, soft U.S. business, litigation issues, foreign exchange exposure remain key headwinds for MasterCard.

DENTSPLY (XRAY) Grapples with Higher Costs & Macro Woes

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.

Estee Lauder (EL) Battles with Slowing Traffic; Weak Growth

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.

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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
 
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