Today's Must Read
Investments & Strong Economic Conditions Aid NextEra (NEE)
Eni (E) Continues to Gain From New Gas Projects in Egypt
Thursday, November 15, 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 PetroChina (PTR), NextEra (NEE) and Eni (E). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
PetroChina’s shares have lost -7.1% over the past six months, outperforming the Zacks International Integrated Oil industry, which declined -11.6% over the same period. While PetroChina recently reported weaker-than-expected third-quarter earnings triggered by tepid oil production growth and massive gas import losses, results were strong overall.
PetroChina's upstream unit profit soared from the year-ago period thanks to steady commodity price recovery and stricter cost control, while the downstream business – consisting of the refining and chemicals activities – also impressed on the back of optimized resource allocation, strict cost control and increased production of high-value products. PetroChina also experienced strong refined products demand and higher natural gas sales.
However, the Zacks analyst thinks the company's weak oil production growth prospects is an area of concern. A limited international operation and losses on gas imports gives investors more reason to be cautious on the stock. Hence, while looking incrementally positive, PetroChina ADRs are expected to remain soft.
Shares of NextEra have outperformed the Zacks Electric Power industry over the past year (the stock is up +12.4% vs. the -4.8% decline for the industry). NextEra Energy’s third-quarter earnings were better than expected, courtesy of solid contribution from both Florida Power & Light Company, and NextEra Energy Resources segments.
The Zacks analyst thinks the company’s investments to strengthen its infrastructure and ongoing capital projects, on completion, will help serve its expanding customer base more efficiently. The expansion of its natural gas operations through strategic acquisitions is going to have a positive impact on earnings.
However, the company’s nature of business is subject to complex and comprehensive federal, state and other regulations. Substantial investments are undertaken to ensure the safety of nuclear operations. That said, the risk of unplanned outages remains, which could derail its normal operations and impact profitability.
Strong-Buy ranked Eni’s shares have gained +1.8% year to date, outperforming the Zacks International Integrated Oil industry, which declined -5.4% over the same period. The Zacks analyst thinks start-up of new upstream projects in Egypt, including Zohr and Noroos gas fields, has been supporting Eni's production growth.
In fact, the company expects oil and natural gas production to rise 3% through 2018. Notably, the decision to spend €3.5 billion through 2021 for exploration and production operations in 25 countries will likely help Eni achieve compound annual production growth rate of 3.5% through 2021 since 2017.
Apart from upstream businesses, Eni is planning to achieve growth in refining, marketing and chemical operations. Through 2021, the company projects free cashflow of more than €4.7 billion from downstream activities. Eni is also committed to returning cash to shareholders through dividend payments as it intends to lift the annual dividend in 2018 by 3.8%.
Other noteworthy reports we are featuring today include Keurig Dr Pepper (KDP), Cummins (CMI) 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>>>