Monday, April 8, 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 Berkshire Hathaway (BRK.B), AT&T (T) and salesforce (CRM). 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 >>>
Buy-ranked Berkshire Hathaway’s shares have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+5.1% vs. +3.1%). Berkshire reported fourth quarter earnings of $5.7 billion, up 71.4% year over year on solid results across all segments. The Zacks analyst thinks the company is poised for growth over a longer-term banking on sturdy insurance business. Its property and casualty insurance business generate maximum return on equity.
The company’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 provides further impetus.
However, its exposure to catastrophe loss remains a concern. Huge capital expenses due to railroad operations is a worry. Capital expenditure is estimated to be $10.5 billion in 2019.
(You can read the full research report on Berkshire Hathaway here >>>).
Shares of AT&T have decreased -8% in the past year, underperforming the Zacks Wireless National industry's increase of +7.8%. The Zacks analyst thinks AT&T is likely to continue its growth momentum in 2019 as it remains poised to benefit from the impending 5G boom and extended LTE coverage, while focusing on reducing its huge debt burden.
As part of the overhaul process of the newly minted WarnerMedia unit, AT&T intends to consolidate all its affiliates and ad sales groups under a unified platform and focus more on video streaming service. The company also aims to reinvent digital advertising and give a new dimension to its business model with integrated business platforms.
AT&T is facing a steady decline in linear TV subscribers and legacy services. The company’s wireline division is facing losses in access lines due to competitive pressure from voice-over-Internet protocol service providers. As AT&T tries to woo customers with discounts, freebies and cash credits, margin pressures tend to soar.
(You can read the full research report on AT&T here >>>).
salesforce’s shares have gained +35.3% in the past year, outperforming the Zacks Computer Software industry, which has gained +28.2% over the same period. The Zacks analyst thinks salesforce is benefiting from strong growth across most of its business segments and deal wins in the international market. Rapid adoption of its diverse cloud offerings given the growing demand for digital transformation remains a key catalyst.
Strengthening relationships with cloud companies like Amazon, Google and IBM are a positive. Additionally, strategic acquisitions like MuleSoft, Datorama and Cloudcraze is helping it to deliver strong growth.
Nevertheless, stiff competition from Oracle and Microsoft is a concern. Currency fluctuations remain a key headwind. Additionally, increasing investments for international expansion and data centers is an overhang on near-term profitability.
(You can read the full research report on Salesforce here >>>).
Other noteworthy reports we are featuring today include Facebook (FB), McDonald's (MCD) and Freeport-McMoRan (FCX).
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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
Berkshire (BRK.B) Set to Grow on Solid Insurance Business
5G & Video Streaming to Negate AT&T's (T) Legacy Woes
salesforce (CRM) Rides on International Growth, Partnerships
Arista (ANET) Rides on Solid Product Portfolio, M&A Deals
Per the Zacks analyst, Arista aims to sustain healthy cash flow in 2019 and beyond on the back of industry-leading product offerings. The integration of Mojo Networks and Metamako remains a tailwind.
Acquisitions, Loans Aid KeyCorp (KEY), High Costs A Concern
The Zacks analyst believe that KeyCorp's inorganic growth strategy, higher rates and rise in loan demand will support revenues. Mounting operating costs continue to be a major near-term concern.
Darden (DRI) Gains From Cheddar's Acquisition & Cost-Savings
The Zacks analyst is encouraged by Darden's aggressive cost management plan, under which it trying to significantly cut operating costs.
Investments Put DICK'S Sporting (DKS) on Growth Trajectory
Per the Zacks analyst, DICK'S Sporting's investments to enhance store experiences, improve online delivery, and develop technology solutions should boost athlete experience and employee productivity.
Foot Locker's (FL) Digital Endeavors to Aid Top-Line Growth
Per the Zacks analyst, Foot Locker's focus on enhancing e-commerce platform, growing direct-to-consumer operations, tapping of underpenetrated markets and opening of Power Stores bode well.
Adoption of Flash-Based Solutions Aids Pure Storage (PSTG)
Per the Zacks analyst, Pure Storage's robust product portfolio of FlashArray & FlashBlade solutions is a positive.
Dividends & Buybacks Aid Alaska Air (ALK) Amid Capacity Woes
The Zacks analyst appreciates the company's efforts to reward shareholders.
Murphy USA (MUSA) to Gain from Proximity to Walmart Stores
The Zacks analyst believes that the proximity of Murphy USA's fuel stations to Walmart supercenters helps the company to leverage the strong and consistent traffic that these stores attract.
Exploration Progress, Debt Reduction to Aid Freeport (FCX)
Per the Zacks analyst, Freeport should gain from its progress in exploration activities to expand production capacity. Also, the company will gain from its efforts to deleverage its balance sheet.
Fee-based Revenue Continues to Aid Principal Financial (PFG)
Per the Zacks analyst, Principal Financial's focus on fee-based revenue sources will continue to help the company to deliver strong operational performance.
Slowing User Growth Rate & Dim Outlook Hurt Facebook (FB)
Per the Zacks analyst, Facebook's profitability will suffer from significant increase in expenses. Slower Stories and Messenger monetization will hurt top-line growth in the near term.
High Costs, Declining Sales Trend Hurt McDonald's (MCD)
Per the Zacks analyst, McDonald's margins have been under pressure from worldwide wage increases and high commodity costs. Also, declining revenues over the past few quarters have been a concern
Asset Outflows, High Costs Hamper Ameriprise (AMP) Profits
Per the Zacks analyst, significant outflows in the Asset Management segment amid tough operating backdrop, and mounting costs will continue to hamper Ameriprise's financial performance.
AT&T Inc. (T) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
salesforce.com, inc. (CRM) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
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