Top Stock Reports for Disney, Union Pacific & Petrobras

Tuesday, January 28, 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 Walt Disney Company (DIS), Union Pacific (UNP) and Petrobras (PBR). 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 >>>

Disney’s shares have underperformed the Zacks Media Conglomerates industry over the past year (+22.5% vs. +29.3%). The Zacks analyst believes that Disney will benefit from its solid slate of theatrical releases in fiscal 2020.

The upcoming movies, including Mulan, Free Guy and Black Widow, are anticipated to aid the Studio Entertainment top line. The success of Frozen 2 (global box office collection of more than $1 billion) and Star Wars: The Rise of Skywalker is positive for the company’s first-quarter fiscal 2020 results. Moreover, growing popularity of Disney+ is a key catalyst.

However, the company anticipates higher operating losses in the DTC & International segment due to the ongoing investments. Moreover, increasing operating expenses related to domestic parks and resorts are expected to negatively impact profitability. 

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

Shares of Union Pacific have gained +0.5% in the past six months against the Zacks Rail industry's rise of +3.4%. The Zacks analyst is impressed with Union Pacific's initiatives to reward its shareholders. Since November 2017, the company has raised its quarterly dividend payout five times.

It is also active on the buyback front. Initiatives to control costs in order to drive the bottom line are also impressive. The company’s operating ratio, which improved 210 basis points (bps) year over year to 60.6% in 2019, has been benefiting mainly owing to its cost-cutting initiatives. Operating ratio is anticipated to improve further in the days to come.

However, sluggish overall volumes (down 11% in fourth-quarter 2019) due to freight-related weakness are a major headwind. Its escalated debt levels are concerning too. Also, the massive capex might be a spoilsport.

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

Petrobras’ shares have lost -11.4% over the past three months against the Zacks Emerging Markets Integrated Oil industry's decline of -5.8%. The Zacks analyst believes that the medium- to long-term outlook of Petrobras looks very positive thanks to its encouraging portfolio of investments, particularly in Brazil’s pre-salt reservoirs.

 Petrobras, burdened with huge debt load, has laid strong emphasis on its debt reduction in its recent five-year Business Management Plan (2020-2024) to strengthen its credit rating. However, its involvement in the Operation Carwash scandal has been a major overhang for the company, which has turned it into the world's most-indebted oil company.

Petrobras carries a net debt of more than $75 billion. As such, leverage remains a key area of concern for the firm. Years of mismanagement & corruption have also taken their toll. Hence, the stock warrants a cautious stance.

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

Other noteworthy reports we are featuring today include PNC Financial Services (PNC), Air Products and Chemicals (APD) and Marriott International (MAR).

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Mark Vickery
Senior Editor

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

Strong Slate of Movies, Disney+ Adoption to Aid Disney (DIS)

Cost Cuts Buoy Union Pacific (UNP) Amid Volume Woes

Pre-Salt Reserves Boosts Petrobras (PBR), Debt Pile Hurts

Featured Reports

Strategic Moves Aid PNC Financial (PNC), High Expenses A Woe

Per the Zacks analyst, PNC Financial's efforts to expand middle market lending franchise through strategic moves remain encouraging.

Project Investments, Productivity to Aid Air Products (APD)

According to the Zacks analyst, Air Products should benefit from its strategic investments in high-return industrial gas projects as well as productivity and cost improvement measures.

Marriott (MAR) Banks on Expansion Plans Amid Currency Woes

Per the Zacks analyst, Marriott's efforts to expand its presence worldwide and capitalize on the demand for hotels will drive growth.

Solid Balance Sheet, Strong U.S. Business Aids Aflac (AFL)

Per the Zacks analyst, Aflac U.S. business continues to perform strongly and has led to top line growth. Its strong balance sheet enables share buyback, dividend payment and investment in business.

Prudential (PRU) Rides on Assurance Buyout, High Costs Hurt

Per the Zacks analyst, the buyout of Assurance will help the company to boost its distribution capabilities and achieve long-term growth.

Cost & Productivity Actions Aid Dow (DOW) Amid Demand Woes

While Dow faces a challenging demand environment in certain markets, it should gain from cost synergy savings and productivity initiatives, per the Zacks analyst.

Long-term Pacts Aid Republic Services (RSG), Debt Woe Stays

Per the Zacks Analyst, long-term contracts for collection, recycling and disposal of solid waste materials keep Republic Services' revenue base in good shape.

New Upgrades

New Buyouts Within Personal Care Arm Aid Amedisys (AMED)

The Zacks analyst is bullish about Amedisys' expanding customer base within Personal Care through strategic buyouts like Bring Care Home and ETPCS.

Buyouts & Improving Loan Balances Aid Hilltop Holdings (HTH)

Per the Zacks analyst, Hilltop Holdings' increased focus to boost fee income and improving loan balances along with strategic expansion efforts via acquisitions will continue to support profitability.

Expense Control & Efforts to Aid Rite Aid (RAD) FY20 Earnings

Per the Zacks analyst, improved pharmacy network at EnvisionRxOptions, higher prescription count at retail pharmacies and tight expense control are likely to aid Rite Aid's earnings in fiscal 2020.

New Downgrades

Falling Margins & Macroeconomic Woes Hurt Palo Alto (PANW)

Per the Zacks analyst, continued acquisitions and heavy investments in marketing are hurting the company's operating margin. Also, U.S. tariffs on Chinese goods is an overhang on the bottom line.

High Input Costs a Worry for B&G Foods' (B&G) Gross Margin

Per the Zacks analyst, B&G Foods remains troubled by input cost inflation. Higher input costs owing to short agriculture crop season, adversely impacted B&G Foods' gross margin in third-quarter 2019.

Michaels Companies' (MIK) Dismal Sales Concerns Investors

Per the Zacks analyst, closure of Pat Catan's store in fiscal 2018, and lower comps and wholesale revenues are hurting Michaels' top line graph. It expects sales of $5.06-$5.08 billion in fiscal 2019.

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Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
The PNC Financial Services Group, Inc (PNC) : Free Stock Analysis Report
 
Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
 
Marriott International, Inc. (MAR) : Free Stock Analysis Report
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report
 
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