Today's Must Read
Competition in Auto Chips Ails Texas Instruments (TXN)
Constellation Brands (STZ) Reaping Brand-Building Benefits
Tuesday, October 17, 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 Netflix (NFLX), Texas Instruments (TXN) and Constellation Brands (STZ). 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-rated Netflix shares have vastly outperformed the Zacks Broadcasting industry, gaining +70.6% vs. +20.4% in the past one year. Netflix third-quarter results benefited from content strength that helped in expanding international subscriber base. The company’s efforts to attract viewers through investing in more regional programming resulted in better-than-expected net addition of subscribers.
The company remains confident of adding more subscribers as the trend of binge viewing is catching up fast. The Zacks analyst likes Netflix’s continuing subscriber additions and expanding content portfolio, and thinks these are the key catalysts that will help Netflix to sustain growth going forward. However, higher investments on original/acquired content will continue to hurt profitability, at least in the near term.
Shares of Texas Instruments have gained +29.1% year to date, underperforming the Zacks General Semiconductor industry which has gained +32.8% over the same period. Texas Instruments is one of the largest suppliers of analog integrated circuits.
The Zacks analyst expects margin expansion to continue driven by the secular strength in the auto and industrial markets, a stronger mix of analog and embedded processing products, benefits of restructuring initiatives and more than 300mm capacity coming online. Moreover, the company recently announced a 24% dividend hike and an additional $6 billion share buyback.
These moves reflect the company's solid cash flow generation ability and balance sheet strength. The only negative at this point appears to be intensifying competition, particularly for auto chips, given recent market consolidation. There is also the question of negative currency effect and a high debt load.
Buy-rated Constellation Brands shares have gained more than +37.2% year to date, exceeding the performance of the Zacks Alcoholic Beverages industry, which has gained +24.9% over the same period. The Zacks analyst likes the company’s superb surprise history and constant brand-building efforts.
The company showcased another sterling performance in second-quarter fiscal 2018, marking its 17th straight quarter of year-over-year earnings growth and 12th straight positive surprise. Constellation Brands benefited from efforts to drive consumer demand for its robust brand portfolio.
Results were also aided by contributions from acquisitions along with continued strength particularly in the beer business. This, along with strength in the beer business, led it to raise earnings outlook for fiscal 2018 and operating income target for the beer segment. However, stiff competition and higher taxes remain concerns.
Other noteworthy reports we are featuring today include Wells Fargo (WFC), Alibaba (BABA) and Phillips 66 (PSX).
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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>>>