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Top Analyst Reports for Procter & Gamble, Netflix & Costco

Mark Vickery

Monday, March 11, 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 Procter & Gamble (PG), Netflix (NFLX) and Costco (COST). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

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

Buy-ranked Procter & Gamble’s shares have outperformed the Zacks Soap and Cleaning Materials industry in the past three months, gaining +4.8% vs +2.3%. The Zacks analyst thinks that this can be attributed to strong second-quarter fiscal 2019 results, robust earnings trend and upbeat view for fiscal 2019.

Top and bottom line beat estimates in the fiscal second quarter, marking 15th straight earnings beat and fifth sales beat in the last six quarters. Earnings benefited from the tax reforms, while strong organic growth with higher shipment volumes and favorable price/mix boosted sales.

The company raised the sales guidance for fiscal 2019. It is also gaining from focus on product improvement, packaging and marketing initiatives, and productivity and cost-savings plan. However, it is witnessing strained margins owing to increased commodity and shipping costs, higher brand investments and aggressive pricing from private-label products amid intense competition. Moreover, adverse currency rates are hurting P&G’s results, which is likely to continue in fiscal 2019.

(You can read the full research report on Procter & Gamble here >>>).

Shares of Netflix have gained +8.8% over the past year, outperforming the Zacks Broadcast Radio and Television industry’s gain of +2.6% during the same period. The Zacks analyst thinks the company is benefiting from an expanding subscriber base primarily driven by its solid content portfolio.

The streaming platform’s growing appeal is helping it to win awards and accolades. Notably, Netflix secured three Oscars for Roma. It also collected an Oscar for Best Documentary (Short Subject). Netflix is reportedly adapting Gabriel Garcia Marquez’s One Hundred Years of Solitude into a Spanish-language TV series.

The portfolio strength is helping Netflix counter competition from the likes of Hulu, HBO, Amazon Prime video and YouTube. However, continuing cash burn and huge debt level are primary concerns. Additionally, intensifying competition in the streaming market due to upcoming services from Disney and Apple is a major headwind.

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

Buy-ranked Costco’s shares have outperformed the Zacks Discount Retail industry over the past year, gaining +20.3% versus the industry's +18.5% increase. The Zacks analyst thinks Costco continues to be one of the dominant retail wholesalers based on the breadth and quality of merchandise offered.

The stock has been gaining from sturdy comps performance and decent results. The company posted positive earnings surprise in the second quarter of fiscal 2019 but revenues fell short of expectations. Notably, the top and the bottom line continued to register year-over-year improvement. Certainly, Costco seems somewhat unfazed by the tough retail scenario.

Growth strategies, increase in membership fees and sturdy e-commerce sales bode well. E-commerce sales surged 32.3% during the quarter. The company’s growth efforts have been fueling traffic across both online and brick-and-mortar platforms. However, any incremental investments or aggressive pricing strategy may hurt margins. Moreover, rising SG&A expenses and stiff competition also pose concerns.

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

Other noteworthy reports we are featuring today include Morgan Stanley (MS), ABB Ltd. (ABB) and Canadian Pacific (CP).

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>

Mark Vickery
Senior Editor

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

P&G's (PG) Productivity & Cost Savings Plan to Drive Profits

Robust Content to Aid Netflix (NFLX) Amid Stiff Competition

Decent Comparable Sales Run to Fuel Costco???s (COST) Top Line

Featured Reports

System Modernization Aids CenterPoint (CNP), High Debt Hurts

Per the Zacks analyst, system modernization initiatives and operational expansion may fuel company's growth. However, company's fixed-rate debt increases vulnerability to adverse economic conditions.

Strategic Buyouts Aid, High Costs Hurt United Health (UHS)

Per the Zacks analyst, its strategic acquisitions such as The Danshell Group has led to significant growth. However, escalating expenses remain a concern for the company.

Regency (REG) Poised for Growth with Grocery-Anchored Assets

Per the Zacks analyst, Regency Centers' high-quality portfolio of grocery-anchored shopping centers offers competitive edge. But, online retailers' penetration in grocery business may limit growth.

Sonoco (SON) Bets on Acquisitions & New Products, Costs Ail

The Zacks analyst appreciates Sonoco's focus to grow through acquisitions, developing new products and pricing initiatives despite higher material costs.

Intercept (ICPT) Ocaliva Picks Up, Overdependence A Concern

Per the Zacks analyst, Intercept's Ocaliva, continue to gain traction as the company expanded the sales force to promote the drug. However, Intercept's dependence on only Ocaliva is a concern.

KBR Rides on Strong Backlog & Government Services Business

Per the Zacks analyst, KBR's robust backlog, strength in Government Services unit and accretive acquisitions are driving its top and bottom lines.

Antero (AR) Continues to Grow on Appalachian Basin Acreage

The Zacks analyst appreciates Antero's strategic acreage position in the Appalachian Basin, which will support its natural gas output growth in 2019.

New Upgrades

Dividends, Buybacks & LTL Unit Aid Old Dominion (ODFL)

The Zacks analysts likes the company's efforts to reward shareholders. Growth of the less-than-truckload (LTL) segment, which accounts for bulk of the top line, is a huge positive.

Operating Ratio, Freight Revenues Aid Canadian Pacific (CP)

The Zacks analyst likes the growth in freight revenues, on the back of strong demand. Improvement in operating ratio (operating expenses as a percentage of revenues) is also a positive.

Acquisitions & Expansions to Boost Copart's (CPRT) Sales

Per the Zacks analyst, acquisitions and location expansions will increase Copart's vehicle storage capacity. This will meet the company's growing customer demand, thereby, driving its sales.

New Downgrades

Muted Underwriting Fees, High Costs Hurt Morgan Stanley (MS)

Per the Zacks analyst, slowdown in debt originations will hamper growth in Morgan Stanley's underwriting fee income. Further, increase in operating expenses remains a major near-term concern.

High Operating Expenses Restrict ABB Ltd (ABB), Margins Weak

Per the Zacks analyst, ABB's revenue growth is being dampened by a rise in operating expenses due to inflation in the prices of major inputs like steel, which is hurting its bottom line and margins.

Donaldson's (DCI) Growth Marred by Weak Gas Turbine Market

Per the Zacks analyst, Donaldson's sales will continue to be hurt by prolonged weakness in the gas turbine market. Further, constrained margins and high operating costs remain concerns.

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Procter & Gamble Company (The) (PG) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Morgan Stanley (MS) : Free Stock Analysis Report
Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
ABB Ltd (ABB) : Free Stock Analysis Report
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