Monday, February 03, 2020
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 Amazon.com, Inc. (AMZN), The Procter & Gamble Company (PG) and Pfizer Inc. (PFE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. We have also included a real-time update on the ongoing Q4 earnings season.
You can see all of today’s research reports here >>>
Q4 Earnings Season Scorecard
We now have Q4 results from 228 S&P 500 members. Total earnings for these companies are down -0.5% from the same period last year on +2.3% higher revenues, with 71.4% beating EPS estimates and 67% beating revenue estimates. This is a better showing than we saw from the same group of 228 index members in the first three quarters of 2019.
Looking at Q4 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total earnings are expected to be down -0.6% from the same period last year on +4% higher revenues.
You can find more details about the ongoing earnings season in our weekly Earnings Preview report >>>>Impressive Tech Sector Earnings
Amazon’s shares have outperformed the Zacks Internet - Commerce industry over the past one-year period (+22.9% vs. +16.8%) and the Zacks analyst expects the momentum continuing on the back of the company's aggressive retail strategies and distribution strength. Rapid adoption of Prime driven by customer benefits and strengthening grocery services is aiding its top line. Further, Prime is driving its holiday sales growth. Also, expanding content portfolio is encouraging Prime membership. Furthermore, strengthening AWS services and its growing adoption rate are aiding Amazon’s dominance in the cloud space.
However, rising transportation cost related to its free one-day shipping service remains an overhang and is likely to increase further. Also, Amazon expects foreign exchange headwinds to continue impacting its top line.
(You can read the full research report on Amazon here >>>)
Shares of Procter & Gamble have gained 27.1% in the past one-year period against the Zacks Soap and Cleaning Materials industry’s rise of 17.8%. The Zacks analyst believes that the company’s solid second-quarter fiscal 2020 earnings mark the continuation of its positive surprise trend. Further, earnings and sales improved year over year in the reported quarter on gains from productivity efforts, robust volume, favorable mix and pricing. Total productivity cost savings aided core currency-neutral gross and operating margin by 120 bps and 220 bps, respectively.
However, currency fluctuations remain concerning. Nevertheless, gains from acquisitions and divestitures are likely to partly offset the currency headwinds.
(You can read the full research report on Procter & Gamble here >>>)
Pfizer’s shares have underperformed the Zacks Large Cap Pharmaceuticals over the past two-year period (+7.4% vs. +17.9%). But the Zacks analyst believes that the company’s Consumer Healthcare joint venture with Glaxo, the Array acquisition and the pending merger of Upjohn unit with Mylan, if successful, will make Pfizer a smaller company with a diversified portfolio of innovative drugs and vaccines. The smaller Pfizer should see better revenue growth as the Lyrica LOE cliff will go away.
Pfizer expects continued strong growth of key brands like Ibrance, Xeljanz and Eliquis to drive sales in 2020. Pfizer also has a strong portfolio of new drugs, which will accelerate growth in 2020 and beyond.
However, Lyrica generic erosion, currency headwinds and pricing pressure are the key near-term top-line headwinds.
(You can read the full research report on Pfizer here >>>)
Other noteworthy reports we are featuring today include NIKE, Inc. (NKE), Southwest Airlines Co. (LUV) and Humana Inc. (HUM).
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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
Prime Momentum & Growing AWS Adoption Benefit Amazon (AMZN)
P&G's (PG) Productivity & Cost Savings Plan to Aid Margins
Pfizer's (PFE) Business Reorganization Can Aid Sales Growth
Acquisition Strategy, Strong Financials Aids HEICO (HEI)
Per the Zacks Analyst, disciplined acquisition strategy has been a pivotal element for the company's overall growth. It also continues to exhibit strong balance sheet and cash flow generation capacity
Enterprise (EPD) Poised to Gain from $3.1B Growth Projects
The Zacks analyst expects Enterprise Products to generate additional cashflow from growth capital projects of $3.1 billion.
Dividends & Buybacks Buoy Southwest (LUV), Cost Woes Prevail
The Zacks Analyst likes the company's efforts to reward its shareholders. However, high non-fuel unit costs due to low capacity following grounding of the Boeing 737 MAX jets are worrisome.
Solid Acquisitions Aid, Rising Expenses Hurt Humana (HUM)
Per the Zacks analyst, a number of acquisitions have helped Humana expand its portfolio, which in turn, aided its top-line.
Orthopedic Unit Aids CONMED (CNMD), Pricing Pressure a Woe
Per the Zacks analyst, strong performance by the Orthopedic segment continues to aid CONMED.
Digital Transformation Efforts to Boost NIKE (NKE) Top Line
Per the Zacks analyst, NIKE is leveraging its mobile apps like the NIKE app and sneakers app, which is now live in over 20 countries. It expects to launch these apps in many countries in fiscal 2020.
Cypress (CY) Benefits From IoT, Consumer Demand A concern
The Zacks analyst believes that Cypress new design wins, strong PSoc products, and expansion in the IoT market are encouraging.
PulteGroup (PHM) Rides on Favorable Housing Market & Buyouts
Per the Zacks analyst, land acquisition strategies along with improved housing market fundamentals backed by favorable interest rates and solid job market is likely to drive growth.
Wise Asset Selection & Portfolio Management Aid Annaly (NLY)
Per the Zacks Analyst, prudent asset selection and timely capital rotation in its investment portfolio will enable Annaly to achieve better returns.
Sallie Mae (SLM) Benefits From Improved Loan Originations
Per the Zacks analyst, Sallie Mae's efforts to enhance loan portfolios are impressive. It receives further support from improving economy. Notably, it expects originations to increase by 6% in 2020.
Unit Wind-Down, Higher Investments Hurt Proofpoint (PFPT)
Per The Zacks analyst, high investments in S&M is likely to weigh on Proofpoint's bottom line in the near term. Also, no expected contribution from the Cloudmark business might dent its top line.
United Technologies (UTX) Hurt By Weakness in Carrier Unit
Per the Zacks analyst, United Technologies' revenues are being affected by softness in its equipment orders at Carrier segment, due to lower transport refrigeration orders. High costs remain concerns.
Low U.S. Demand & High Debt to Ail Harley-Davison (HOG)
Sales of Harley Davidson's bikes, especially in the United States, are on the decline amid consumer demographic shift. The Zacks analyst is also worried of the firm's elevated leverage of 74%.
Procter & Gamble Company (The) (PG) : Free Stock Analysis Report
Pfizer Inc. (PFE) : Free Stock Analysis Report
NIKE, Inc. (NKE) : Free Stock Analysis Report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
Humana Inc. (HUM) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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