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Top Research Berkshire Hathaway, Comcast & Honeywell

Mark Vickery
Top Research Berkshire Hathaway, Comcast & Honeywell

Friday, October 12, 2018

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 Berkshire Hathaway (BRK.B), Comcast (CMCSA) and Honeywell (HON). 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 >>>

Strong Buy-ranked Berkshire Hathaway’s shares have outperformed the Zacks Insurance - Property and Casualty industry year to date (+3.5% vs. +1.7%). The Zacks analyst thinks Berkshire Hathaway’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position allows it to make earnings-accretive bolt-on buyouts.

Demand for utilities is expected to rise in the future and drive earnings growth. Continued insurance business growth also fuels increase in float. A sturdy capital level further adds an impetus to the company.

The insurance business generates maximum return on equity but its exposure to catastrophe loss remains a concern. Huge capital expenses due to railroad operations also emerge as headwinds. Capital expenditure is estimated to be $10 billion in 2018.

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

Shares of Comcast’s shares have outperformed the Zacks Cable Television industry year to date, losing 15.9% vs. -16.8% in the space. The Zacks analyst thinks Comcast is benefiting from solid growth in the number of residential high-speed Internet customers. Higher spending on political ads is expected to drive growth. Strong adoption of Xfinity Home will likely be another growth driver.

The company expects to continue investments on Theme Parks, which is expected to drive top-line growth. The nationwide rollout of the DOCSIS 3.1 technology and the completion of the nationwide rollout of Comcast’s wireless services under the Xfinity Mobile brand will boost subscriber base going forward.

Further, the acquisition of Sky presents a significant growth opportunity in Europe. However, the company continues to lose voice and video subscribers due to cord-cutting and stiff competition. Additionally, high debt level is a headwind.

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

Honeywell’s shares have outperformed the Zacks Diversified Operations industry over the past three months, increasing +4.2% vs. a -1.6% decline. The company believes that sturdier demand for its innovative technology solutions will continue to drive its segmental revenues in the quarters ahead.

The Zacks analyst thinks stronger sales volumes, increased productivity and ongoing commercial effectiveness actions will boost up near-term profitability. However, the stock looks overvalued compared to the industry for the past three-month period.

The company is presently facing inflationary headwinds across its entire supply-chain process. Inflation in logistics, transportation and in certain material prices might continue to weigh over Honeywell’s profitability in the upcoming quarters. Over the past seven days, the Zacks Consensus Estimate for the company’s earnings has remained unchanged for both 2018 and 2019.

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

Other noteworthy reports we are featuring today include NextEra (NEE), Tesla (TSLA) and AIG (AIG).

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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

Berkshire Hathaway (BRK.B) to Gain from Railroad Business


High Speed Internet Subscriber Gains Benefit Comcast (CMCSA)


Honeywell (HON) Braves Cost Woes with Solid Volume Growth


Featured Reports

Inflows Aid Blackstone's (BX) Asset Growth, High Costs a Woe

Per the Zacks analyst, continued net inflows will further aid Blackstone's assets under management, thereby boosting top line. Yet, higher costs due to its franchise investment might hurt profits.

AIG (AIG) Set to Grow on Business De-risking, Cost Control

Per the Zacks analyst, AIG is set to grow on streamlining its core insurance operations, restructuring businesses and cost reductions. Waning topline, soft General Insurance segment are concerns.

Acuity Brands (AYI) to Gain From Innovation, Costs High

Per the Zacks analyst, diversified portfolio of innovative lighting control solutions and energy-efficient luminaries are key growth drivers.

Tesla (TSLA) Rides on Production & Energy Storage Deployment

Per the Zacks analyst, Tesla gains from solid strides in vehicle production, deliveries and infrastructure. Also, its focus on adding energy storage capacity is boosting its growth momentum.

Unit Revenues Aid American Airlines (AAL), Fuel Costs Ail

The Zacks analyst appreciates the company's performance with respect to unit revenues. Efforts to modernize its fleet are also encouraging.

Product Rollouts & Growing Merchant Base Aid Shopify (SHOP)

Per the Zacks analyst, Shopify is benefiting from introduction of Fraud Protect and Shopify Ping solutions.

Strategic Collaborations Aids Aon (AON), High Leverage Ails

Per the Zacks analyst, Aon will grow on expansion via strategic acquisitions and partnerships and strong financial position.

New Upgrades

Ongoing Investments, Customer Additions Aid NextEra (NEE)

The Zacks analyst believes NextEra continues to gain from $40- $44B investment planned for 2017-2020 period to strengthen operations. Its expanding customer base is boosting demand.

Oasis Petroleum (OAS) Rides High on Top-Tier Bakken Acreage

The Zacks analyst believes that Oasis Petroleum will benefit from its huge exposure in the Bakken shale play that will help the company achieve 25% year-over-year volume growth.

Haemonetics (HAE) Gains Ground on Strong Plasma Business

Per the Zacks analyst, strength in disposable kits and liquids sales along with receipt of some regulatory clearances should continue to drive Haemonetics' plasma franchise growth in the near term.

New Downgrades

Rising Costs, Seasonal Fluctuations Hurt Vulcan (VMC)

Per the Zacks analyst, Vulcan is experiencing higher costs that is likely to impact the company's profitability. Susceptibility to bad weather conditions further add to the woes.

High Debt Level, Cash Outflows Ail U.S. Silica (SLCA)

Per the Zacks analyst, U.S. Silica's significant cash outflows, as reflected by sizable capital spending, will affect its ability to generate free cash flows. Its high debt level is another concern.

Brown & Brown's (BRO) Escalating Expenses Raise Concern

Per the Zacks analyst, rising expenses, mainly due to higher compensation and operating costs, will continue to restrict Brown & Brown's operating margin expansion.


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