Today's Must Read
Schlumberger's (SLB) Higher Fracking Work Offsets Debt Load
Netflix (NFLX) Rides on Solid Original Content Portfolio
Thursday, March 1, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including United Technologies (UTX), Netflix (NFLX) and Schlumberger (SLB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
United Technologies’ shares have gained 13.3% over the last three months, outperforming the Zacks Diversified Operations industry, which has lost -3.2% over the same period. United Technologies serves various end-markets, which allows it to remain profitable even during tough economic times.
The company has offered bullish guidance for 2018 on healthy demand trends and is likely to deliver sustainable earnings growth in future with Rockwell merger. However, macroeconomic conditions and fluctuations in foreign currency exchange rates affect the company’s bottom-line growth.
A disruption in deliveries from suppliers, capacity constraints, production disruptions, price changes, or decreased availability of raw materials or commodities is likely to have an adverse effect on its ability to meet delivery schedules, thereby increasing its operating costs.
Shares of Netflix have increased 54.5% over the last three months, significantly outperforming the Zacks Broadcast Radio and Television industry’s gain of 22% during the same period. The company’s efforts to attract viewers through investing in more regional programming are leading to robust addition of international subscribers.
The company remains confident of adding more subscribers as the trend of binge viewing is catching up fast. Netflix now has 117.58 million subscribers globally. We believe continuing subscriber addition and expanding content portfolio are the key catalysts that will help Netflix to sustain growth going forward.
However, increasing market spends and higher investments on original/acquired content will continue to hurt profitability, at least in the near term. Rising competition is also a major concern.
Schlumberger’s shares have outperformed the Zacks Oil and Gas - Field Services industry over the past three months, gaining 7.7% vs -4.3%. Schlumberger is the largest oilfield services player in the world with presence in every energy market across the world. Also, in all the operating business segments, the company is among the top players.
The firm has been banking on growing hydraulic fracturing work in the North American land market. Schlumberger’s consistent efforts toward strengthening technologies helped it serve complex oilfield services projects globally. The company is also expected to generate significant cashflow from the Palliser Block project where it is assisting Torxen Energy in setting up more than 1,600 oil wells.
However, since 2015, Schlumberger’s long-term debt load increased considerably. Moreover, the company’s cash balance declined 45% year-over-year in 2017, reflecting significant balance sheet weakness.
Other noteworthy reports we are featuring today include Lennar (LEN), Rockwell Collins (COL) and Paychex (PAYX).
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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>>>