Today's Must Read
High Speed Internet Subscriber Gains Benefit Comcast (CMCSA)
Honeywell (HON) Braves Cost Woes with Solid Volume Growth
Friday, October 12, 2018
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 Berkshire Hathaway (BRK.B), Comcast (CMCSA) and Honeywell (HON). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Strong Buy-ranked Berkshire Hathaway’s shares have outperformed the Zacks Insurance - Property and Casualty industry year to date (+3.5% vs. +1.7%). The Zacks analyst thinks Berkshire Hathaway’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position allows it to make earnings-accretive bolt-on buyouts.
Demand for utilities is expected to rise in the future and drive earnings growth. Continued insurance business growth also fuels increase in float. A sturdy capital level further adds an impetus to the company.
The insurance business generates maximum return on equity but its exposure to catastrophe loss remains a concern. Huge capital expenses due to railroad operations also emerge as headwinds. Capital expenditure is estimated to be $10 billion in 2018.
Shares of Comcast’s shares have outperformed the Zacks Cable Television industry year to date, losing 15.9% vs. -16.8% in the space. The Zacks analyst thinks Comcast is benefiting from solid growth in the number of residential high-speed Internet customers. Higher spending on political ads is expected to drive growth. Strong adoption of Xfinity Home will likely be another growth driver.
The company expects to continue investments on Theme Parks, which is expected to drive top-line growth. The nationwide rollout of the DOCSIS 3.1 technology and the completion of the nationwide rollout of Comcast’s wireless services under the Xfinity Mobile brand will boost subscriber base going forward.
Further, the acquisition of Sky presents a significant growth opportunity in Europe. However, the company continues to lose voice and video subscribers due to cord-cutting and stiff competition. Additionally, high debt level is a headwind.
Honeywell’s shares have outperformed the Zacks Diversified Operations industry over the past three months, increasing +4.2% vs. a -1.6% decline. The company believes that sturdier demand for its innovative technology solutions will continue to drive its segmental revenues in the quarters ahead.
The Zacks analyst thinks stronger sales volumes, increased productivity and ongoing commercial effectiveness actions will boost up near-term profitability. However, the stock looks overvalued compared to the industry for the past three-month period.
The company is presently facing inflationary headwinds across its entire supply-chain process. Inflation in logistics, transportation and in certain material prices might continue to weigh over Honeywell’s profitability in the upcoming quarters. Over the past seven days, the Zacks Consensus Estimate for the company’s earnings has remained unchanged for both 2018 and 2019.
Other noteworthy reports we are featuring today include NextEra (NEE), Tesla (TSLA) and AIG (AIG).
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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>>>