Today's Must Read
Kraft Heinz (KHC) Fights Sales Slump with Cost-Saving Plans
Cost Control, Improving End-Markets to Drive Caterpillar (CAT)
Monday, December 18, 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), Kraft Heinz (KHC) and Caterpillar (CAT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Disney’s shares have increased +5.6% in the last one year vs. the Zacks Media Conglomerates industry’s -3.4% decline in that same time period. Disney is acquiring majority of Twenty-First Century Fox’s assets, which includes its Film and Television studios accompanied by cable and international TV businesses in a transaction worth $52.4 billion.
The deal provides a shot in the arm to Disney, which for quite some time now has been jostling in the fast changing media landscape, where rise in streaming and cord cutting have become the norm. The buyout of these assets would considerably enhance the media mogul’s bargaining power with Cable TV providers, increase affiliate fees, provide a fresh lease of life to ESPN and create cost synergies.
Further, the addition of Fox's rich library of movies and TV series would greatly enhance Disney’s prospects in the streaming service arena. Bob Iger will continue to spearhead the company through 2021 for a smooth integration of Fox’s assets into Disney.
Shares of Kraft Heinz have declined -8.9% year to date, underperforming the Zacks Diversified Food industry which is down -5.5% during the same period. Kraft Heinz’s cost savings have led to better profits amid a soft sales environment. The company expects between $1.7 billion and $1.8 billion of cumulative Integration Program savings by the end of 2017, primarily focused on work-force reductions, factory closures and consolidations.
Also, with growing awareness of the nutritional value of food products, the company is emphasizing on organic ingredients, reshaping its existing products and expanding into new categories. However, continued softness in sales has weighed on the company’s performance. Also, the trend in 2017 and 2018 earnings estimate revisions is not satisfactory as it has remained stable over the past 30 days.
Strong Buy-rated Caterpillar’s shares have gained +58.2% year-to-date, outperforming the Zacks Construction and Mining industry which has increased +56.4% over the same period. Caterpillar reported a 26% rise in global retail sales for the three months ended November 2017, marking the fastest pace since 2012. This was driven by improvement across all regions with construction, mining and energy reporting the best performances year to date.
Caterpillar's 2017 guidance of revenues of $44 billion and earnings per share of $6.25 reflects a year-over-year growth of 14% and 83%, respectively. Higher sales in Asia Pacific and North America, improved order rates and backlog will fuel growth in Construction Industries. Resource Industries will gain on higher aftermarket parts sales. Energy & Transportation will be buoyed by improved sale of engines into industrial applications, strength in onshore North America oil and gas and transportation. Further, ongoing efforts to reduce costs will help boost margins.
Other noteworthy reports we are featuring today include Constellation Brands (STZ), Humana (HUM) and Regeneron (REGN).
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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>>>