Tuesday, April 16, 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 Coca-Cola (KO), United Technologies (UTX) and Royal Dutch Shell (RDS.A). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Coca-Cola 's shares have outperformed the Zacks Soft Drinks Beverages industry in the past year, (+4.9% vs. -6.1%), driven by its ongoing productivity efforts and disciplined growth strategies. This aided results in fourth-quarter 2018, wherein earnings were in line while sales beat estimates marginally.
Price/mix improvements due to core business strength also contributed to the solid results. The Zacks analyst thinks acceleration of sparkling soft drinks category through investment and innovation also bode well. Moreover, its transformative global re-franchising initiatives are expected to boost margins. However, the company issued a bleak earnings and sales view for 2019.
Notably, the company expects adverse currency rates to significantly hurt comparable revenues and operating income in the first quarter and 2019. Currency headwinds have persistently hurt the company's results for the past few quarters, including fourth-quarter 2018. Further, emerging market volatility and soft CSD volumes continue to remain impediments.
Shares of United Technologies have gained +8.5% in the past year, outperforming the Zacks Diversified Operations industry, which has declined -0.1% over the same period. The Zacks analyst thinks strength in commercial and military aftermarket businesses and impressive contribution from its acquired Rockwell Collins business sales will likely boost United Technologies' near-term revenues.
Also, improved top line and cost-cutting measures are expected to enhance profitability, going forward. Backed by these positives, the company has given bullish full-year 2019 revenue guidance. In addition, it intends to become more competent on the back of meaningful business acquisitions.
However, rising costs of sales remain a concern for the company's gross margin. If unchecked, higher costs and operating expenses will prove detrimental to United Technologies' margins and profitability. Moreover, increases in debt levels can increase its financial obligations.
Royal Dutch Shell 's shares have lost -1% in the last six months, outperforming the Zacks Integrated Oil industry's loss of -3.4% during the same period. Shell's upstream unit profit has rebounded strongly thanks to steady commodity price recovery, while the integrated gas business - consisting of BG Group activities - impressed on the back of pricing gains.
The Zacks analyst thinks the Anglo-Dutch company's position as a key supplier of LNG should benefit its long-term cash flow growth. However, there are apprehensions that the group's disposal program could affect oil production, which fell 2% year over year in 2018.
The company's poor reserve replacement ratio is another concern. Hence, investors are advised to wait for a better entry point before buying shares in the integrated major.
Other noteworthy reports we are featuring today include VALE (VALE), Estee Lauder (EL) and Disney (DIS).
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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 Trendsand Earnings Previewreports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Per the Zacks analyst, Vale will benefit from rising iron ore prices due to the imminent demand-supply imbalance, lower debt and efforts to turn around its coal business.
Per the Zacks analyst, Estee Lauder sales are set to gain from efforts to enhance travel retail, which saw solid growth in the second quarter due to traffic, effective launches and marketing plans.
Per the Zacks analyst, Shopify is benefiting from introduction of Fraud Protect and Shopify Ping solutions.
Per the Zacks analyst, acquisitions like Heartland Payments, Pay and Shop, Ezidebit, PayPros, eWay, communities and sports divisions of ACTIVE Network, have added breadth to the company???s business.
The Zacks analyst is bullish about robust demand of the company???s flagship Vault platform.
Per the Zacks analyst, growing revenues driven by premium growth and accretive acquisitions has led to significant growth.
Per the Zacks analyst, acquisitions and cost-saving initiatives bode well for RPM.
Per the Zacks analyst, the buyout of Anadarko Petroleum by Chevron will drive the share value of the stock in the upcoming days.
The Zacks analyst believes that the Gray Oak Pipeline will not only back Phillips 66 Partners to steadily increase cash distribution but also partly solve the Permian bottleneck problem.
Per the Zacks analyst, the FDA's approval for Sunosi is likely to boost Jazz's sleep franchise which continues to perform well on the back of strong demand for Xyrem.
Per the Zacks analyst, Disney's ongoing investments in technology along with higher content and marketing costs will negatively impact profitability.
The Zacks analyst is concerned about capacity expansion outpacing traffic growth at Alaska Air. High operating expenses are also limiting bottom-line growth.
Per the Zacks analyst, increasing costs due to continued rise in salaries and employee benefits are likely to hurt Commerce Bancshares' bottom line. Exposure toward risky loans also remains a concern.