Tuesday, February 5, 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 Pepsico (PEP), Walt Disney Company (DIS) and Sanofi (SNY). 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 >>>
Pepsico’s shares have outperformed the Zacks Soft Drinks Beverages industry in the last six months (-3.6% vs. -6.5%). Earnings topped estimates in the last 11 quarters, while it delivered positive sales surprise in five of the last seven quarters. The improvement is mainly attributable to strong performances in international divisions, propelled by higher revenue growth in developing and emerging markets. Also, the company’s solid snacks division is boosting the performance.
However, concerns regarding strained margins continue to linger, owing to operating and commodity cost inflation. Higher costs from transportation and stepped-up advertising expense are likely to continue going ahead, which should weigh on margins.
(You can read the full research report on Pepsico here >>>).
Shares of Disney have gained 5.3% over the past year, outperforming the Zacks Media Conglomerates industry’s gain of 3.1% during the same period. Additionally, the company’s blockbuster performance at the box office bodes well.
Moreover, Disney’s top line is expected to benefit from the solid line-up of big budget movies slated to be released over the next 18 months. Notably, estimates have been stable over the past seven days ahead of the company's Q1 earnings release. The company has positive record of earnings surprise in the recent quarters.
However, Disney’s ongoing investments in its technology platform are expected to keep margins under pressure. Additionally, higher programming costs at ESPN remains a concern. Moreover, weakness in the Consumer Products & Interactive Media segment is a headwind.
(You can read the full research report on Disney here >>>).
Sanofi’s shares have gained 3.2% in the last six months, outperforming the Zacks Large Cap Pharmaceuticals industry's increase of 1%. It has several new products in its portfolio and candidates in its pipeline that can boost long-term growth. In fact, Sanofi’s product launches are now delivering revenues greater than the loss of exclusivity impact.
Particularly, we are optimistic about Dupixent’s sales prospects, which could prove to be an important growth driver. The performance of the Vaccines and Consumer Healthcare units has also improved lately. However, headwinds include a bleak outlook for the Diabetes franchise, generic competition for many drugs and slower-than-expected uptake of core products like Praluent.
(You can read the full research report on Sanofi here >>>).
Other noteworthy reports we are featuring today include Enbridge (ENB), Diageo (DEO) and HCA Healthcare (HCA).
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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
Robust Snacking Category to Drive PepsiCo's (PEP) Sales
Disney (DIS) to Benefit from Strong Slate of Movie Titles
Sanofi (SNY) Diabetes Unit Weak, New Drugs to Drive Growth
Energizing the Future Plan to Aid FirstEnergy's (FE) Growth
Per the Zacks analyst, FirstEnergy's modernization drive and ambitious Energizing the Future plan will add to the company's overall operational strength.
Dividends & Buybacks Buoy Delta (DAL) Amid Cost Woes
The Zacks analyst appreciates the company's efforts to reward shareholders. Efforts to reduce debt levels are also impressive. High operating expenses are, however, limiting bottom-line growth.
Strong Backlogs & Partnerships to Aid Lear Corporation (LEA)
Per the Zacks analyst, strong backlog growth and sales from affiliates to drive Lear Corporation's revenues. Further, partnerships for product development programs will ensure its long-term growth.
Acquisitions Benefit BOK Financial (BOKF), Rising Costs Ail
Per the Zacks analyst, BOK Financial benefits from strategic acquisitions, latest being CoBiz Financial, which is expected to be 6% accretive in 2019. Yet, rising operating expenses remain a concern.
Kroger's (KR) Customer 1st, Restock Program to Aid Top Line
Per the Zacks analyst, Kroger's customer 1st strategy, restock program and digital endeavors will help drive growth.
Rising Top-line Aid HCA Healthcare (HCA), High Costs Hurt
Per the Zacks analyst, its growing revenues driven by increasing admissions has led to significant growth.
Solid Comps at Bath & Body Works to Aid L Brands (LB) Sales
Per the Zacks analyst, stellar performance at L Brands' Bath & Body Works segment will continue to drive sales growth. The company anticipates fourth-quarter comps to rise in the range of 1-4%.
Enbridge (ENB) to Gain from Big Foot Oil Pipeline Project
Per the Zacks analyst, Enbridge's 40-mile Big Foot Oil Pipeline, which boasts of strong project execution skills, will generate stable fee-based revenues over the long term.
Telefonica (TEF) Rides on Network Expansion, Customer Growth
Per the Zacks analyst, accelerated rollout of fiber, LTE and ultra-fast networks should optimize Telefonica's growth opportunities in the digital world while strengthening its broadband customer base.
Diageo's (DEO) Innovation & Expansion Efforts Boosts Results
Per the Zacks analyst, continuous innovation to satisfy local tastes and focus on expansion in emerging and fast-growing markets have largely fueled Diageo's sales and earnings in recent years.
Hilton's (HLT) Soft Leisure Demand in U.A.E Region a Woe
Per the Zacks analysts, soft leisure demand in U.A.E might impact Hilton's RevPAR in the Middle East and Africa. Also, lower government spending and increased hotel supply in the region are worrisome
Cardinal Health (CAH) Hurt by Pharmaceutical Pricing Woes
Cardinal's profits in the Pharmaceutical segment are marred by generic pharmaceutical pricing. This apart, the Zacks analyst considers competition & customer concentration as other headwinds.
Rising Long-Term Debt, Negative Cashflow to Hurt Hess (HES)
The Zacks analyst believes that it will be difficult for Hess to raise capital in favorable terms for funding future projects given the escalating debt load. Negative cashflow is another concern.
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