Today's Must Read
AT&T (T) Rides on Solid Subscriber Momentum, Unlimited Plans
Fund-Raising Ability Aids Blackstone (BX), High Costs Ails
Friday, September 23, 2022
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 Union Pacific Corporation (UNP), AT&T Inc. (T) and Blackstone Inc. (BX). 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 >>>
Union Pacific shares have outperformed the Zacks Transportation - Rail industry over the past year (+2.6% vs. -2.1%). UNP's strong free cash flow generating ability supports its shareholder-friendly activities. The company hiked dividend twice in 2021. In May 2022, UNP further upped its quarterly dividend by 10%.
The uptick in overall volumes as labor woes ease is an added positive. The railroad operator is also active on the buyback front. Management expects share repurchases in 2022 to be in line with the 2021 levels.
However, escalation in fuel costs as oil prices move north is worrisome. This phenomenon induced a 20% rise in the operating expenses during first-half 2022. Fuel costs surged 82% in the period. Fuel costs are likely to be high in the September quarter as well. Results will be out on Oct 20. High capital expenditures may also be a downside.
(You can read the full research report on Union Pacific here >>>)
AT&T’s shares have declined -41.7% over the past year against Verizon's -27.8% decline and -16.8% pullback in the S&P 500 index. The company is struggling with a steady decline in its legacy telephony Internet and wireline services. High-speed Internet revenues are also contracting due to a decline in the legacy digital subscriber line. With the divesture of WarnerMedia, AT&T must build upon its core businesses to improve its value proposition as spectrum crisis and cord-cutting remain challenges.
However, AT&T is witnessing solid subscriber momentum. A customer-centric business model, is providing the company with healthy growth in its postpaid wireless business alongside a lower churn rate and higher-tier unlimited plans.
The company is actively investing in key areas of 5G and fiber and adjusting its business according to the evolving market scenario to fuel long-term growth. While optimizing operations, it is aiming to increase efficiencies to lower operating costs.
(You can read the full research report on AT&T here >>>)
Blackstone’s shares have declined -33.3% over the past year against the Zacks Financial - Miscellaneous Services industry’s decline of -27.2%. The company’s elevated operating expenses are expected to hurt the company's bottom line in the near term. Our estimates for total expenses (GAAP) suggest a CAGR of almost 17% over the next three years.
Additionally, lower chance of sustainability of its capital deployment activities (given the volatile nature of its earnings) remains another major near-term concern and hence makes us apprehensive. However, Blackstone remains well-poised to benefit from its strong fund-raising ability, revenue mix and global footprint.
The buyout of DCI is expected to further enhance its digital capabilities. Additionally, continued net inflows are expected to support Blackstone's assets under management (AUM) growth, going forward. Our estimates for total AUM indicate a rise of 8.5% for 2022.
(You can read the full research report on Blackstone here >>>)
Other noteworthy reports we are featuring today include The Southern Company (SO), Gilead Sciences, Inc. (GILD), and Waste Management, Inc. (WM)
Director of Research
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>>>