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Q4 Earnings Scorecard and Research Reports on Netflix, Chevron & Others

Sheraz Mian

Thursday, January 23, 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 Chevron (CVX), Netflix (NFLX) and NextEra Energy (NEE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

We have also provided you a real-time update on the ongoing Q4 earnings season, which takes into account this morning's releases. 

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

Q4 Earnings Season Scorecard

Including all of this morning's results, we now have Q4 results from 75 S&P 500 members that combined account for 19.4% of the index's total market capitalization.Total earnings or aggregate net income for these 75 index members are down -1.3% from the same period last year on +3.2% higher revenues, with 69.3% beating EPS estimates and 72% beating revenue estimates. 

The earnings and revenue growth is about in-line with what we had seen from this group of companies in the first three quarters of 2019. But a bigger proportion of companies are beating revenue estimates, while EPS beats are tracking below what we had seen for this group of index members in the first three quarters of the year. 

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 -3% on +3.7% higher revenues. 

Today's Featured Analyst Reports 

Chevron’s shares have outperformed the Zacks Integrated Oil industry over the past year (-0.6% vs. -6.7%), with the Zacks analyst crediting the oil super major's best-in-class production-growth profile for the outperformance. These are undoubtedly tough times in the oil patch, but Chevron's impressive history of uninterrupted dividend payments should be long-term investors' minds (currently yields a juicy 4.75%)

America’s No. 2 energy company’s existing project pipeline is among the best in the industry, thanks to planned expansion in the lucrative Permian Basin. Chevron’s substantial Permian holdings of 2.2 million net acres have already realized production growth of 71% in 2018 with Chevron targeting output of 900,000 barrels per day in 2023.

Chevron’s well economics in the play also continues to improve as it has been able to achieve a 40% reduction in its expenses since 2015. Consequently, Chevron is viewed a preferred energy major to own now.

(You can read the full research report on Chevron here >>>)

Netflix shares have struggled lately, with the stock lagging the broader market since July 2019, on concerns that the going will increasingly be tougher going forward as a result of increasing competitive pressures, particularly in the home market. The market appeared unimpressed with Tuesday's December-quarter results that showed strong overall subscriber additions but weakness on the home turf. 

Netflix’s fourth-quarter 2019 subscriber addition rate declined in the United States, primarily due to price hike and stiff competition. However, in international streaming markets, Netflix’s subscriber growth continued unabated, driven by a solid content portfolio.

However, management expects net additions in the paid subscriber base to decline in first-quarter 2020. Moreover, high streaming content obligation and increased spending are expected to hurt free cash flow generation. Nevertheless, a solid content portfolio and expanding bundle offerings through partnerships with telcos bode well for Netflix.

(You can read the full research report on Netflix here >>>)

NextEra Energy’s shares have gained +9.4% over the past three months against the Zacks Electric Power industry's rise of +4.5%. The Zacks analyst believes that NextEra Energy is gaining from ongoing investments, which are in turn aiding it to deliver strong segmental performance.

NextEra’s “30 by 30” plan will help meet its goal to make its generation portfolio cleaner. The $50 to $55 billion investment in different projects over the 2019-2022 period will modernize and strengthen its infrastructure. The company will also gain from positive economic fundamentals in its service territories.

However, its nature of business is subject to complex and comprehensive federal, state and other regulations. That said, if planned nuclear plant outages last longer or there is an unplanned outage, the company’s normal operations and profitability might be hindered.

(You can read the full research report on NextEra Energy here >>>)

Other noteworthy reports we are featuring today include International Business Machines (IBM), Cigna (CI) and HCA Healthcare (HCA).

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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

Chevron (CVX) to Gain from Stellar Permian Operation

Robust Content Aids Netflix (NFLX) Amid Stiff Competition

Investment in Infrastructure and Renewable Aid NextEra (NEE)

Featured Reports

Robust Adoption of Cloud Solutions Aids IBM Amid High Debt

Per the Zacks analyst, IBM's blockchain, cloud and ML capabilities, among others poises its offerings well to gain robust adoption.

Express Scripts Acquisition, Revenue Growth Aid Cigna (CI)

Per the Zacks analyst, the buyout of Express Scripts has diversified Cigna's operations opening up new revenue streams.

Rising Top-line Aid, High Debts Hurt HCA Healthcare (HCA)

Per the Zacks analyst, its growing top-line driven by increasing admissions has led to significant growth of the company.

Regulated Investments & Cost Management Aid Exelon (EXC)

Per the Zacks analyst Exelon's cost management initiatives will have positive impact on margins and its planned $23B investments will strengthen its operation.

Non-Memory Segment Drives Lam Research (LRCX); Risks Remain

The Zacks analyst believes that strength in device architectures and non-memory segments will drive its top line.

Investment in Brands Portfolio to Power Brown-Forman (BF.B)

Per the Zacks analyst, Brown-Forman's investments in the brands portfolio, including broadening of the Jack Daniel's family of brands should aid growth.

Solid Cloud Demand & Expanding Clientele Aids Splunk (SPLK)

Per the Zacks analyst, Splunk is benefiting from solid demand for cloud-based solutions and new customer wins.

New Upgrades

Post Holdings (POST) to Benefit From Solid Foodservice Unit

Per the Zacks analyst, Post Holdings is likely to keep gaining from its foodservice segment strength. Notably, unit sales grew 4.5% in the fourth quarter on solid refrigerated potato products demand.

Adoption of Flash-Based Solutions Aids Pure Storage (PSTG)

Per the Zacks analyst, Pure Storage's robust adoption of cloud storage solutions, including Cloud Block Store, ObjectEngine Cloud and CloudSnap is driving prospects.

Strength in Analytical Services Drives HMS Holdings (HMS)

HMS Holdings continues to gain from its core Analytical Services. The Zacks Analyst is optimistic about a strong guidance 2019.

New Downgrades

BP to be Hurt by Lower Refining Margin and Huge Debt Burden

The Zacks analyst expects lower refining margins to affect BP's profit levels. Moreover, massive debt is likely to constraint its financial flexibility.

Continued Weakness in Coal Revenues Mars CSX's Prospects

The Zacks analyst is concerned about the persistent decline in coal revenues due to low export demand and benchmark prices, which forced the company to provide a drab outlook for 2020 revenues.

Schneider National (SNDR) Hit by Truckload Unit, Cost Woes

The Zacks Analyst is worried due Schneider National's truckload segment's underperformance. Moreover, higher operating expenses are hurting the bottom line.

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Netflix, Inc. (NFLX) : Free Stock Analysis Report
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
Chevron Corporation (CVX) : Free Stock Analysis Report
Cigna Corporation (CI) : Free Stock Analysis Report
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