Today's Must Read
Rite Aid Stores Addition, Alphabet Deal Aid Walgreens (WBA)
Asset Sales to Whittle Down Southern Company's (SO) Debt
Wednesday, February 27, 2019
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 NextEra Energy (NEE), Walgreens Boots (WBA) and Southern Company (SO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked NextEra Energy’s shares have outperformed the S&P 500 in the past year, gaining +24.1% vs +1.8%. The Zacks analyst thinks NextEra Energy’s investments to strengthen its infrastructure and ongoing capital projects, on completion, will help in serving the expanding customer base more efficiently. The expansion of business through strategic acquisitions positively impacted 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.
Shares of Walgreens Boots have underperformed the S&P 500 year to date, gaining +4.6% vs. +11.5%. Within Walgreen Boots' Retail Pharmacy USA division, the company has been making good progress on account of increasing prescription volume. The company is launching a new phase of transformational cost management to counteract margin pressure.
Walgreens has been gaining on account of strategic tie-ups as well. The Zacks analyst is optimistic about Walgreens Boots’ recent alliance with Alphabet’s life sciences and healthcare segment Verily. The company launching next-day prescription delivery service with FedEx buoys optimism.
Overall, the guidance for fiscal 2019 looks promising. However, tough market conditions, particularly in retail, have been leading to sluggishness in Retail Pharmacy International division. The ongoing generic drug inflation is hurting Walgreens' pharmacy margin.
Buy-ranked Southern Company's shares have outperformed the S&P 500 over the past six months, gaining +10.3% vs -3.6%. The Zacks analyst thinks Southern Company is one of the largest and best-managed electric utility holding companies in the United States, dominating the power business across the southeastern region.
With good rate base growth and constructive regulation, it is expected to generate steady earnings and dividend growth in the coming years through long-term power contracts. Additionally, SO's $12 billion AGL Resources buy has significantly increased its customer base and diversified offerings. However, continued timing and cost overrun issues over two large construction projects – Vogtle and Kemper – are major overhangs.
While the $25 billion Vogtle nuclear plant has gone well over budget and is years behind schedule, Southern's Kemper project suffered yet another setback with the suspension of all coal gasification operations amid additional cost burden. Hence, Southern Company warrants a cautious stance from the investors.
Other noteworthy reports we are featuring today include CSX Corporation (CSX), Ameriprise Financial (AMP) and Macy's (M).
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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>>>