Today's Must Read
Digital Transformation Efforts to Boost NIKE (NKE) Top Line
Expense Control Aids Citigroup (C), Low Fee Income A Woe
Monday, December 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 Walmart Inc. (WMT), NIKE, Inc. (NKE) and Citigroup Inc. (C). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Walmart’s shares have outperformed the Zacks Retail - Supermarkets industry year to date (+27.0% vs. +24.2%). The Zacks analyst believes that Walmart’s top line has been gaining from its focus on enhancing e-commerce and store operations. Further, the company is making efforts to improve its International unit by shifting focus to profitable countries. These factors helped Walmart retain its sturdy earnings surprise record in third-quarter fiscal 2019, wherein U.S. comps rose for the 21st straight time.
However, the company has been witnessing strained margins for a while now, due to costs associated with e-commerce and technological investments; along with a compelling pricing strategy. In fact, investment in Flipkart is expected to continue weighing on Walmart’s bottom line in fiscal 2020.
Shares of Nike have gained 54.7% in the past two-year period against the Zacks Shoes and Retail Apparel industry’s rise of 48.7%. The Zacks analyst believes that despite a volatile macroeconomic and geopolitical environment, Nike expects to continue investing in key capabilities to aid digital transformation and deliver robust growth in fiscal 2020 and beyond.
First-quarter fiscal 2020 had already marked the 10th straight quarter of top-line beat for the company, with earnings beat in 29 of the last 30 quarters. But, higher SG&A expenses and tax rate, as well as adverse currency are headwinds. The company expects SG&A expenses to increase high-single digit in second-quarter fiscal 2020.
Citigroup’s shares have outperformed the Zacks Banks - Major Regional industry year to date (+45.1% vs. +30.5%). The Zacks analyst believes that its impressive third quarter results reflected revenue strength, along with rising loan and deposit balance. Also, investment banking revenues escalated and reduced volumes and client activity levels were recorded in the quarter. Citigroup’s streamlining efforts, along with strategic investments in core business, bode well for the long term. Also, declining costs base support the bottom-line improvement.
However, pending litigation issues might keep legal expenses elevated. Further, decline in fee income is another concern for the company.
Other noteworthy reports we are featuring today include BP p.l.c. (BP), Intel Corporation (INTC) and ResMed Inc. (RMD).
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