Today's Must Read
Facebook's (FB) Q2 Earnings Driven by Mobile & Live Efforts
Coca-Cola (KO) Rides on Innovation, Productivity Initiatives
Friday, July 28, 2017
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 Facebook (FB), Coca-Cola (KO) and Verizon (VZ).These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Facebook’s shares have outperformed the S&P 500 index over the last one year, gaining +37.5% vs. +13.7%. Facebook’s second-quarter 2017 earnings and revenues smashed expectations. Moreover, despite caution, ad revenues continued to witness robust growth. Apart from mobile and video, the potential for monetization of its Instagram, Messenger, WhatsApp and Oculus assets, a huge user base and room for higher engagement levels remain at the core of the company's attractive fundamentals.
Longer term, Facebook's investments in augmented reality/virtual reality (AR/VR) and artificial intelligence (AI) technologies also remain promising. On the flip side, Facebook has stated that revenues will now face tougher year-over-year comparisons. Stiffening competition for ad dollars is another major concern.
Buy-rated Coca-Cola’s shares have gained +11.2% in the year-to-date period outperforming the Zacks Consumer Staples sector as a whole, which has gained +10.4%. Coca-Cola reported better-than-expected second-quarter 2017 results. However, Coca-Cola's total sales decreased 16%, marking the ninth consecutive quarterly decline in revenue.
Although top line needs to show sustained improvement, the Zacks analyst likes the company’s strategic efforts toward transforming itself into a total beverage company with improved marketing and innovation, focus on driving revenues by improved price/mix, digital focus and productivity initiatives toward driving margins. Further, successful rollout of Coke Zero Sugar globally, as evident from Coca-Cola’s ability to leverage successful innovation to support top-line growth, is quite encouraging.
Shares of Verizon have lagged over the past year -- the stock is down 13.7% over the past 12 months vs. AT&T's 9% decline and the 13.7% gain for the S&P 500 index. Verizon's underperformance reflects the market's concerns about the company's muddled strategy in the digital media domain and rising competitive pressures in its core U.S. wireless business.
Verizon posted mixed second-quarter 2017 financial results, with net gains of 614,000 postpaid and 19,000 prepaid wireless customers. The Yahoo purchase, as well as other previously acquired digital properties like AOL and Huffington Post, will boost its digital media suite. The long-term expectation is that these assets will give it a sizable enough platform to capture digital marketing dollars.
The jury is still out on the long-term viability of these efforts, but the company is also trying to be a player in the online TV streaming space and defend its leadership position in the wireless market through 5G wireless network trials. However, a full-phased 5G wireless network will be offered only in 2020.
The company's dividend appears safe (currently yields 4.8%), but the inherent capital intensity of its core business and the need for purchases on the digital side ends up eating up more than it generates in its operations. In the updated research report issued today, the Zacks analyst discusses the pros and cons of investing in Verizon shares at present.
Other noteworthy reports we are featuring today include Boeing (BA), Comcast (CMCSA) and General Dynamics (GD).
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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>>>