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Q4 Earnings Scorecard & Today's Top Stock Research Reports

Sheraz Mian

Thursday, January 16, 2020

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 Johnson & Johnson (JNJ), BHP Group (BHP) and Moody's (MCO). 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 >>>

We have also included the real-time scorecard on the ongoing Q4 earnings season. Including all of this morning's reports, we now have Q4 results from  35 S&P 500 members. Total earnings for these 35 index members are down -4.2% from the same period last year on +4.1% higher revenues, with 74.3% beating EPS estimates and an equal proportion beating revenue estimates.

For the Finance sector, we now have results from 37.1% of the sector's total market cap in the S&P 500 index. Total earnings for these Finance companies are down -0.3% from the same period last year on +6% higher revenues, with 66.7% beating EPS estimates and 83.3% beating revenue estimates. This is a modestly better growth pace relative to what we saw from this group of Finance companies in the preceding quarter, but fewer companies are beating EPS estimates.

For a more detailed look at the Q4 earnings season and expectations for the coming quarters, please check out our weekly Trends report >>>Banks Provide Mixed Start to Q4 Earnings Season 

Johnson & Johnson’s shares have modestly underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+14.1% vs. +14.8%), likely reflecting a combination of litigation overhang and generic/biosimilar headwinds in the Pharma unit.

However, the unit is performing above-market levels, supported by contribution from new drugs like Tremfya and successful label expansion of cancer drugs like Imbruvica and Darzalex and immunology drug, Stelara. J&J is also making rapid progress with its pipeline/line extensions. However, headwinds like biosimilar/generic competition and pricing pressure remain.

 Moreover, J&J faces numerous lawsuits, which allege personal injuries to patients caused by the use of its products. These are overhangs on the stock.  Estimates have risen slightly ahead of Q4 results. J&J has a positive record of earnings surprises in the recent quarters.

(You can read the full research report on Johnson & Johnson here >>>)

Shares of BHP have gained +16.2% in the past three months against the Zacks Mining - Miscellaneous industry's rise of +19.1%. The Zacks analyst believes that trade volatility and slowdown in global growth have made investors apprehensive and affected commodity markets, which will weigh on BHP Group’s results.

 BHP Group anticipates unit costs to be higher in fiscal 2020 thanks to natural field decline at conventional petroleum, falling copper grades, lower by-product credits and higher deferred stripping costs at Escondida.

With iron ore supply from Australia expected to hit record highs, iron ore prices will be under pressure. However, metal prices will recover eventually driven by demand-supply imbalance.

Thus, BHP Group is poised to gain from its investment plans in petroleum, copper, iron ore and potash. Further, the company’s efforts to make operations efficient by adopting smarter technology across its value chain will also drive results. Strong cash flow and lower debt also bode well.

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

Moody's shares have gained +25.8% over the past six months against the Zacks Financial Services industry's decline of -4.6%. The Zacks analyst believes that the company remains well-positioned on the back of its dominant position in the credit rating industry.

Also, the company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Moreover, the earnings estimates have been going up ahead of its fourth quarter 2019 results.

Also, its diverse revenue base, strategic inorganic initiatives and strong balance sheet position bode well for future. However, volatility in macro environment and slowdown in global bond issuance volumes along with mounting expenses mainly owing to investments in franchise are expected to hurt profitability. Also, the divestiture of the Analytics Knowledge Services business is expected to be dilutive to 2019 GAAP earnings.

(You can read the full research report on Moody's here >>>)

Other noteworthy reports we are featuring today include NVIDIA (NVDA), Vale S.A. (VALE) and Delta Air Lines (DAL).

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Sheraz Mian

Director of Research

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

J&J's (JNJ) Pharma Unit Shines Amid Generic/Litigation Woes

Operational Efficiency Aid BHP Group (BHP), Low Prices Ail

Buyouts Diversify Moody's (MCO) Revenues Amid Rising Costs

Featured Reports

NVIDIA (NVDA) Gets a Boost From Gaming Business Recovery

Per the Zacks analyst, NVIDIA is benefiting from the rising traction of GeForce desktop and notebook GPUs in the gaming market.

Low Debt, Cost Control Support Vale (VALE) Amid Low Prices

Per the Zacks analyst, lower debt levels and focus on improving quality, productivity and lowering costs will drive Vale's growth despite the impact of lower commodity prices.

Dividends, Buybacks & Passenger Revenues Buoy Delta (DAL)

The Zacks Analyst likes the uptick in passenger revenues (up 6% in 2019) backed by strong air-travel demand. Delta's efforts to reward its shareholders ($3 billion in 2019) are impressive too.

Public Storage (PSA) Gains from Buyouts, Supply Woes Remain

Per the Zacks Analyst, Public Storage is poised to gain from its high brand value, favorable demographic changes and strategic acquisitions. However, rising supply remains a concern.

Pharmaceutical Distribution Unit Aids AmerisourceBergen (ABC)

Per the Zacks analyst, Pharmaceutical Distribution segment, fueled by rising volume and expanding customer base, continues to aid AmerisourceBergen. But higher operating expenses remains a concern.

Nasdaq (NDAQ) Banks on Buyouts, Expenses Rise

Per the Zacks analyst, buyouts have aided Nasdaq in gaining access to Canadian equity markets and widened technology offering.

Denbury (DNR) to Gain from CCA CO2 EOR Pipeline Project

Denbury's CCA CO2 EOR Pipeline is expected to support its rising production in the Cedar Creek Anticline.

New Upgrades

$6B Investment, Renewable Energy Focus Aid Evergy (EVRG)

Per the Zacks analyst Evergy's $6 billion investment in the 2019-2023 time frame to strengthen its operation and plans to produce more electricity from renewable sources will boost its performance.

Xerox (XRX) Benefits From Post-Sale Driven Business Model

Per the Zacks analyst, Xerox's post-sale driven business model provides significant recurring revenue and cash generation, enabling it to make strategic investments and new market entry.

Wix (WIX) Rides on Growth in Collections & Registered Users

Per the Zacks analyst, Wix has been gaining from rise in registered users of its applications. Moreover, new products and efficient pricing strategies are likely to keep boosting collection revenues.

New Downgrades

Women's Category Softness a Worry for Kohl's (KSS) Comps

Per the Zacks analyst, Kohl's has been troubled by softness in its women's category and higher promotions. This weighed on its holiday comps and led to slightly lowered earnings view for fiscal 2019.

SBS Segment & Elevated Costs a Worry for Sally Beauty (SBH)

Per the Zacks analyst, Sally Beauty's SBS segment is battling hurdles in Europe, along with currency headwinds. Also, SG&A expenses are likely to rise in fiscal 2020 on high wage rates and investment.

Core Labs (CLB) Hurt by Slower Offshore Project Progress

The Zacks analyst is concerned over the slower-than-expected progress in the large international and offshore projects, which will weigh on Core Labs' Reservoir Description unit.


VALE S.A. (VALE) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Johnson & Johnson (JNJ) : Free Stock Analysis Report

Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report

BHP Group Limited (BHP) : Free Stock Analysis Report

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