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Top Analyst Reports: Royal Dutch Shell, Occidental Petroleum, Williams Companies & More

Kalyan Nandy

Wednesday, August 7, 2019

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including Royal Dutch Shell (RDS.A), Occidental Petroleum (OXY) and Williams Companies (WMB). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Royal Dutch Shell’s shares have outperformed the Zacks International Integrated Oil industry in the year to date period, losing -1.7% vs -2.3%. Notwithstanding the second-quarter earnings miss, the recommendation for Royal Dutch Shell is maintained at 'Neutral'. While the oil company could not match profit expectations due to lower commodity prices and depressed refining margins, cash flows surged during the most recent quarter, allowing it to cut debt while performing share buybacks and cash dividend distribution. The Zacks analyst thinks the Anglo-Dutch company's position as a key supplier of liquefied natural gas should benefit its long-term cash flow growth on the back of attractive growth opportunities. However, there are worries over the drop in its downstream earnings. The company’s poor reserve replacement ratio is another concern. Hence, investors are advised to wait for a better entry point.

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

Shares of Occidental Petroleum have underperformed the Zacks U.S. Integrated Oil industry over the past year, declining -41.4% vs. -39.6%. Occidental Petroleum’s second-quarter earnings and revenues were better than expected, courtesy of strong production from Permian Resources. The company is benefiting from increasing oil production from Permian resources. Its decision to acquire Anadarko Petroleum will further expand operations in the Permian Basin. The strategy to divest lower-margin oil and gas assets will be productive for the company over the long run. However, like other oil and gas companies, Occidental faces the risk of cost overruns and interruptions due to delays in drilling and other approvals. A highly competitive industry and ongoing fluctuation in commodity prices are adversely impacting operations of the company. Increasing debt level is another concern.

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

Williams Companies’ shares have underperformed the Zacks Oil Production and Pipeline industry over the past three months, losing -21% vs. -18.4%. The Zacks analyst thinks that Williams is well positioned to capitalize on the projected increase in U.S. natural gas demand owing to its impressive portfolio of large-scale value-creating projects. The firm’s existing and expansionary projects on the Transco pipeline helped the company deliver an earnings beat in the second quarter. Williams’ buyout of its midstream arm and JV deals with Brazos Midstream and Canadian Fund bode well for future growth. However, the company's high leverage restricts its financial flexibility. Regulatory setback suffered by the Constitution Pipeline project is also a cause for concern. Further, Williams’ extensive natural gas exposure raises sensitivity to the commodity’s weak price.

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

Other noteworthy reports we are featuring today include VeriSign (VRSN), TransDigm (TDG) and American Water Works (AWK).

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Note: Our Director of Research 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

Royal Dutch Shell (RDS.A) to Gain from Growing LNG Demand

Permian Focus & Anadarko Acquisition to Aid Occidental (OXY)

Williams (WMB) Banks on Transco Pipeline Amid High Debt Load

Featured Reports

Acquisitions Aid TransDigm (TDG), Rising Debt Levels Hurt

Per the Zacks analyst, TransDigm strengthens its position in proprietary aerospace components' niche markets through strategic acquisitions. However, rising debt levels can be a major headwind.

Higher .com, .net Registrations Benefit VeriSign (VRSN)

Per the Zacks analyst, VeriSign benefits from higher .com and .net domain name registrations as well as improving renewal rates.

Customer Growth & Investments Aid American Water Works (AWK)

Per Zacks analyst, American Water Works' planned investment of $8-$8.6B from 2019 through 2023 and customer additions via organic and inorganic means will boost performance.

Strategic Initiatives Aid Hartford (HIG), High Costs Hurt

Per the Zacks analyst, a number of strategic initiatives, such as the buyout of Navigators Group, poise it well for long-term growth. However, escalating expenses continue to weigh on margins.

Solid Insurance Business Aids Everest Re (RE), Cat Loss Ails

Per the Zacks analyst, Everest Re is set to grow on product diversification, capital adequacy, financial flexibility and traditional risk management capabilities.

Solid Uptake Of Omnipod DASH Aids Insulet Corporation (PODD)

The Zacks analyst is bullish about Insulet's strong pod production at the U.S. manufacturing facility and the launch of the Omnipod DASH, both of which are driving revenues.

Papa John's (PZZA) Fights Declining Comps With Franchising

The Zacks analyst thinks that Papa John's efforts to strengthen its franchise relations will help the company expand its worldwide presence.

New Upgrades

Fortinet (FTNT) Rides on Solid Product Menu, Large Deal Wins

Per the Zacks analyst, Fortinet is benefiting from an upsurge in large deals, aided by its SD-WAN solutions. Moreover, buoyant demand for cloud offerings and Security Fabric is a tailwind.

Strong Markets, Acquisitions Aid Carpenter Technology (CRS)

Per the Zacks analyst, strong demand in most end markets, acquisitions and investing in targeted growth areas like additive manufacturing and soft magnetics will drive growth for Carpenter Technology.

VERIGENE Platform Continues to Aid Luminex (LMNX)

Per the Zacks analyst, Luminex's VERIGENE platform continues to drive growth primarily on the back of sustained increase in sample-to-answer utilization per VERIGENE customer.

New Downgrades

Currency Headwinds, High Costs Hurt Ball Corporation (BLL)

The Zacks analyst remains concerned that unfavorable currency impact, higher freight rates, start-up costs and aluminum scrap headwinds will impact Ball Corporation's results.

Forex Woes, Divestments and Debt to Hurt Flowerve (FLS)

Per a Zacks analyst, Flowserve is concerned about higher forex headwinds, with likely 2% impact on sales in 2019 versus 1.5% predicted earlier. Also, high debts and divestitures are drags.

Stericycle (SRCL) Grapples with Declining Recall Events

Per the Zacks analyst, Stericycle's top line remains weak as its Communication and Related Services (CRS) business is witnessing significantly lower revenues due to declining recall events.

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Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
VeriSign, Inc. (VRSN) : Free Stock Analysis Report
Transdigm Group Incorporated (TDG) : Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
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