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Research Daily

Friday, November 30, 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 AT&T (T), NIKE (NKE) and Simon Property Group (SPG). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

AT&T’s shares have decreased 16.2% in the past year, underperforming the Zacks Wireless National industry's increase of +0.5%. The Zacks analyst likes how AT&T is ramping up its FirstNet program and revamping its lineup of video products, pricing and promotion initiatives. The company is also gearing up to launch the first standards-based mobile 5G services in multiple U.S. markets by the end of 2018.

AT&T updated its guidance for 2019 following the acquisition of WarnerMedia. It now expects significant growth in free cash flow, which should help it achieve the target of debt ratio in the 2.5x range by the end of 2019 and a low single digit growth rate in adjusted EPS. AT&T is facing a steady decline in linear TV subscribers and legacy services.

The company’s wireline division is facing losses in access line due to competitive pressure from voice-over-Internet protocol service providers. As AT&T tries to woo customers with discounts, freebies and cash credits, margin pressures tend to escalate.

(You can read the full research report on AT&T here >>>).

Shares of Nike have gained +24.1% in the past year, outperforming the Zacks Shoes and Retail Apparel industry, which gained +19% over the same period, driven by a strong earnings trend stemming from the solid execution of Consumer Direct Offense. The Zacks analyst emphasizes that Nike has delivered positive earnings for over three years now, with first-quarter fiscal 2019 marking the 25th straight quarter of earnings beat.

Moreover, sales topped estimates for the sixth straight quarter. Strong progress on Consumer Direct Offense through innovation and focus on direct-to-customer are the key drivers. Additionally, growth at international and Nike Direct businesses, alongside momentum in North America led to growth in the fiscal first quarter.

However, higher SG&A expenses due to increased demand creation expense and operating overheads are likely to remain a drag. Further, the unfavorable currency environment due to the global trade and geopolitical dynamics is likely to weigh on the company’s sales. Hence, it provided a soft guidance for fiscal 2019 and the second quarter.

(You can read the full research report on NIKE here >>>).

Simon Property Group’s shares have outperformed the Zacks Retail REIT industry over the past three months (+0.8% vs. -4.3%). The Zacks analyst thinks the trend in estimate revisions of current-year funds from operations (FFO) per share indicates a favorable outlook for the company.

Amid a strong economy, positive consumer sentiment and with an alluring range of deals, festive activities, dining and entertainment options at its properties, Simon Property recorded a 2% uptick in traffic from its comparable period a year earlier during the beginning of the holiday shopping season. Notably, the company has a diversified exposure to retail assets in the United States and abroad. It has a strong and improving balance sheet and is poised to gain from new development, redevelopment, expansion and acquisition efforts.

Nevertheless, the implementation of such measures requires a decent upfront cost and therefore, may limit any robust growth in its near-term profit margins. Rate hike has added to its woes.

(You can read the full research report on Simon Property Group here >>>).

Other noteworthy reports we are featuring today include Chubb Limited (CB), FedEx (FDX) and American Electric (AEP).

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Mark Vickery
Senior Editor

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>>>

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