Today's Must Read
NextEra (NEE) Benefits From Customer Growth and Investments
Solid Inventory Management Fuels TJX Companies (TJX) Margins
Wednesday, November 15, 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 Disney (DIS), NextEra (NEE) and TJX Companies (TJX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Disney’s shares have increased +4.1% in the last one year vs. the Zacks Media Conglomerates industry’s -5.5% decline in that same time period. Disney reported lower-than-expected results in fourth-quarter fiscal 2017. However, the Zacks analyst thinks that the deal with Rian Johnson, director of The Last Jedi, to produce a new Star Wars trilogy has raised hopes of investors.
Further, a strong performance by the Parks & Resorts unit continues to impress. The company’s decision to terminate the distribution agreement with Netflix for subscription streaming and having its own streaming services —one for Disney and Pixar brands and another for ESPN followers — is likely to be a driving factor in the long run.
Also, in an effort to attract online viewers, Disney has completed the acquisition of BAMTech. However, falling subscriber and higher programming costs at ESPN were the major concerns this quarter too. The fresh NBA agreement and rise in contractual rate are driving up programming costs.
Shares of NextEra have outperformed the Zacks Electric Power industry in the year-to-date period (the stock is up +32.6% vs. +12.9% gain for the industry). NextEra’s earnings in the third quarter topped expectations on strong performance of its segments. NextEra Energy’s operations were temporarily impacted by adverse weather conditions in its service territories.
However, the investments already made to strengthen its infrastructure helped it overcome the difficult situation and quickly restore normalcy of operations. The Zacks analyst likes the company’s focus on clean energy, which has lowered emission levels and saved on energy bills for its customers. The natural gas pipelines, which came online in the first half, are expected to boost its performance.
On the flip side, the company’s nature of business is subject to complex and comprehensive federal, state and other regulations. Unpredictable impact of natural disaster and delay in completion of ongoing projects could also impact profitability.
TJX Companies’ shares have underperformed the Zacks Discount Stores industry over the last three months, losing -5.1% vs a +7.5% increase. However, TJX Companies has been recording year-over-year growth in both top and bottom lines for a while now, thanks to robust consumer traffic and strength in merchandise margins.
The Zacks analyst likes the company’s focus on store expansions, e-commerce efforts, solid merchandise mix and other sales driving initiatives. Further, its strong merchandise margins reflect its focus on inventory management. Notably, these factors drove its performance in third-quarter fiscal 2018.
However, comps in the third quarter were dented by hurricanes, with demand for Marmaxx apparel being hurt by warm weather. Also, TJX Companies has been witnessing high wage costs for quite some time now. It also expects this factor to hurt earnings growth by 2% in fiscal 2018.
Other noteworthy reports we are featuring today Oracle (ORCL), Toyota (TM) and Sempra (SRE).
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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>>>