Wednesday, February 27, 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 NextEra Energy (NEE), Walgreens Boots (WBA) and Southern Company (SO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked NextEra Energy 's shares have outperformed the S&P 500 in the past year, gaining +24.1% vs +1.8%. The Zacks analyst thinks NextEra Energy's investments to strengthen its infrastructure and ongoing capital projects, on completion, will help in serving the expanding customer base more efficiently. The expansion of business through strategic acquisitions positively impacted earnings.
However, the company's nature of business is subject to complex and comprehensive federal, state and other regulations. Substantial investments are undertaken to ensure the safety of nuclear operations. That said, the risk of unplanned outages remains, which could derail its normal operations and impact profitability.
Shares of Walgreens Boots have underperformed the S&P 500 year to date, gaining +4.6% vs. +11.5%. Within Walgreen Boots' Retail Pharmacy USA division, the company has been making good progress on account of increasing prescription volume. The company is launching a new phase of transformational cost management to counteract margin pressure.
Walgreens has been gaining on account of strategic tie-ups as well. The Zacks analyst is optimistic about Walgreens Boots' recent alliance with Alphabet's life sciences and healthcare segment Verily. The company launching next-day prescription delivery service with FedEx buoys optimism.
Overall, the guidance for fiscal 2019 looks promising. However, tough market conditions, particularly in retail, have been leading to sluggishness in Retail Pharmacy International division. The ongoing generic drug inflation is hurting Walgreens' pharmacy margin.
Buy-ranked Southern Company 's shares have outperformed the S&P 500 over the past six months, gaining +10.3% vs -3.6%. The Zacks analyst thinks Southern Company is one of the largest and best-managed electric utility holding companies in the United States, dominating the power business across the southeastern region.
With good rate base growth and constructive regulation, it is expected to generate steady earnings and dividend growth in the coming years through long-term power contracts. Additionally, SO's $12 billion AGL Resources buy has significantly increased its customer base and diversified offerings. However, continued timing and cost overrun issues over two large construction projects - Vogtle and Kemper - are major overhangs.
While the $25 billion Vogtle nuclear plant has gone well over budget and is years behind schedule, Southern's Kemper project suffered yet another setback with the suspension of all coal gasification operations amid additional cost burden. Hence, Southern Company warrants a cautious stance from the investors.
Other noteworthy reports we are featuring today include CSX Corporation (CSX), Ameriprise Financial (AMP) and Macy's (M).
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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, increased contract wins for its cost-effective defense solutions from the Pentagon drives Leidos' growth and bolster its backlog.
Per the Zacks analyst, Zillow Group's growth can be attributed to its Premier Agent Business, new construction marketplaces and increasing traffic at its mobile apps as well as websites.
Per the Zacks analyst, Macy's price optimization, cost containment and omnichannel strategy will help lift performance.
Per the Zacks analyst, Universal Display benefits from Adesis acquisition. Further, new OLED-based product launches from premium handset makers like Apple and Google are likely to aid the top line.
Per the Zacks analyst Aqua America's 64 completed acquisitions in last five year, planned investment of $1.4B in 2019-2021 time period will support organic growth.
Per the Zacks analyst, continued acceleration in Lincoln Electric's end markets, focus on innovative new products and recent acquisitions will drive growth.
Per the Zacks analyst, SITE Centers' efforts to transform portfolio on the back of premium acquisitions and property redevelopments will stoke growth.
The Zacks analyst thinks that the company is well placed to gain from strong demand across aerospace and automotive end-markets and a favorable metal pricing environment in 2019.
The Zacks analyst is optimistic about CSX's measures to reward its shareholders through dividends and share buybacks. Additionally, the company benefits from volume growth and favorable pricing.
Per the Zacks analyst, robust demand for Email Fraud Defense, Threat Response and Wombat solutions are proving to be a key growth driver for Proofpoint.
Per the Zacks analyst, significant outflows in the Asset Management segment continue to be a major concern Ameriprise. Also, mounting operating costs will likely hurt bottom-line growth to an extent.
Per the Zacks analyst, Wayfair is suffering from increasing advertising and investment spending. Further, growing competition in e-commerce space from a dominant player like Amazon remains a headwind.
Per the Zacks analyst, incremental SG&A expenses have been pressurizing Watsco's margins and profitability. Seasonal influences on its performance is also a pressing concern.
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