Today's Must Read
Walmart (WMT) Trusts on E-Commerce Initiatives to Fuel Sales
Solid Insurance Business, Buyouts to Aid Berkshire (BRK.B)
Tuesday, October 10, 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 Comcast (CMCSA), Wal-Mart Stores (WMT) and Berkshire Hathaway (BRK.B). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Comcast shares have gained +1.5% over the last six months, outperforming the Zacks Cable Television industry which has gained +1.2% over the same period. Comcast completed the nationwide rollout of its wireless services under the Xfinity Mobile brand, with plans to include YouTube in its X1 video platform.
Comcast is venturing into residential solar programs with a 40-month deal with Sunrun. Comcast is working towards 5G network deployment and continues to roll out its DOCSIS 3.1-based internet services to Comcast Business customers. Comcast has forayed into the OTT video delivery market with its Internet TV service – Stream. Comcast continues to expand its theme park business.
With this, Comcast aims to check customer churn and provide viewers with more streaming options. However, tough competition, consolidation-related woes, mounting programming costs, loss of customer base act as near-term risks for Comcast. Competitive threat from online streaming service providers remains a concern.
Share price of buy-rated Walmart has been outperforming the industry on a year-to-date basis (+16.5% vs. +8.7%), as the company is pushing itself to understand the evolving needs of its customers and expand itself in both brick-and-mortar space as well as e-commerce activities.
On one hand, the company is posting positive comps at Walmart U.S. for 12 successive quarters. On the other, it is also building its e-commerce capabilities through acquisitions and growing in the online grocery and delivery market. However, the company still faces headwinds such as unfavorable currency, stiff competition from both brick & mortar and online retailers and huge expenses related to e-commerce investments.
Nevertheless, the company makes efforts to offset these headwinds with its initiatives to boost sales. The recent move to consolidate its U.S. operations will simplify its business structure and facilitate communication as well as improve execution.
Berkshire Hathaway shares have gained +15% year to date, outperforming the Zacks Property and Casualty Insurance industry which increased +12.1% during the same period. Berkshire Hathaway’s inorganic story remains impressive with strategic acquisitions.
Continued investment through strategic acquisition testifies confidence in business environment post new President elect. The strong cash position also allows it to make earnings-accretive bolt-on acquisitions. Demand for utilities is expected to be strong in the future and drive earnings growth.
Continued insurance business growth fuels increase in float. A sturdy capital level adds to the overall strength as well. However, Berkshire Hathaway’s exposure to catastrophe losses, Buffett’s succession and huge capital expenses on account of its railroad operations remain headwinds. Capital expenditure is estimated to be $4.8 billion for the remainder of 2017. Estimates have also moved down over the last 60 days.
Other noteworthy reports we are featuring today include Bank of America (BAC), NextEra Energy (NEE) and Twenty-First Century Fox (FOXA).
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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>>>