Today's Must Read
Increasing Rates, Loan Growth Supports U.S. Bancorp (USB)
EOG Resources (EOG) Banks on Bakken, Gathering Costs High
Thursday, December 20, 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 Disney (DIS), U.S. Bancorp (USB) and EOG Resources (EOG). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Disney’s shares have increased +1.6% year to date, outperforming the Zacks Media Conglomerates industry’s -1.1% decline in that same time period. The Zacks analyst thinks Disney’s top line will benefit from the solid line-up of big budget movies slated to be released over the next 18 months.
Moreover, solid content portfolio at ESPN+ as well as impressive Disney+ original content line-up, expected to release in 2019, is expected to win subscribers rapidly. However, Disney’s ongoing investments in its technology platform are expected to keep margins under pressure. Additionally, higher programming costs at ESPN remains a concern.
Weakness in the Consumer Products & Interactive Media segment is a headwind. Further, higher labor-related costs and softness experienced in tourism and consumer confidence in China are likely to impact Parks & Resorts segment in the near term.
Shares of Buy-ranked U.S. Bancorp have outperformed the Zacks Major Banks industry over the past six months, losing -9.4% vs -16.9%. The company possesses an impressive earnings surprise history, beating expectations in all the trailing four quarters.
The Zacks analyst thinks U.S. Bancorp's prospects will likely get support from its solid business model, core franchise, lower tax rate, rising interest rate and diverse revenue streams. Also, its organic growth remains solid and will likely benefit from the improving economic scenario. Though escalating expenses due to its ongoing investments in technology and likely increase in legal expenses remain concerns, U.S. Bancorp remains well poised to grow through acquisitions.
EOG Resources’ shares have declined -12.6% over the past year, outperforming the Zacks Oil & Gas E&P Industry, which has slumped -33.2% over the same period. Besides being the largest player in the Eagle Ford, EOG Resources also holds significant top tier acreage in Permian, Bakken play and Powder River Basin.
The Zacks analyst thinks that with the recent discovery of Mowry and Niobrara sites in Powder River Basin, the firm has solidified its position and poised itself for greater returns. Moreover, EOG Resources’ healthy financials provides it financial flexibility to tap into growth opportunities. Also, in the third quarter of 2018, the company’s discretionary cash flow surged more than 95% year over year, reflecting strength in its operations.
However, the company’s lack of exposure to international resources is a drag. Its Permian operations can also take a hit due to takeaway capacity constraints. Rising operating expenses, in particular the gathering and processing cost, possesses threat to its bottom-line. Therefore, the stock warrants a cautious stance.
Other noteworthy reports we are featuring today include 3M (MMM), HCA Healthcare (HCA) and Micron Technology (MU).
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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>>>