Today's Must Read
Favorable Demand, Acquisitions Drive Deere (DE), Costs Ail
Regulated Investments, Cost Management Aid Exelon (EXC)
Thursday, February 28, 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 Comcast (CMCSA), Deere (DE) and Exelon (EXC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Comcast’s shares have outperformed the S&P 500 in the past year, gaining +6.4% vs. +2.9%. The Zacks analyst thinks Comcast is benefiting from solid growth in residential high-speed Internet customers. Expanding Wi-Fi coverage along with innovative xFi control features is improving customer experience. The company’s Xfinity Mobile is now used by more than one million customers.
Additionally, Green Book’s Best Picture Oscar win bodes well for Comcast division Universal Pictures. Further, the Sky acquisition expands Comcast’s international reach. Notably, the company will enter the streaming market through NBCUniversal’s upcoming service.
However, the streaming market is highly competitive and significant investment is needed to gain footprint. Hence, incremental spending on content can hurt Comcast’s margin expansion. Moreover, the company continues to lose voice and video subscribers due to cord-cutting. Additionally, high debt level is a headwind.
Shares of Deere have increased +11.7% over the past six months, outperforming the S&P 500, which has declined -3.6% over the same period. Deere’s first-quarter fiscal 2019 adjusted earnings and revenues rose on a year-over-year basis aided by demand growth in key markets. Earnings missed expectations while revenues beat the same.
For fiscal 2019, Deere projects net sales growth of 7% year over year and net income of $3.6 billion. The Zacks analyst thinks the company will benefit from improving construction markets and growing replacement demand for agricultural equipment. The acquisition of Wirtgen, which enhances Deere's exposure to global transportation infrastructure, will be a catalyst. Introduction of advanced technologies in its products will fuel growth.
Raw material cost inflation, elevated expenses and unfavorable foreign currency impact will hurt margins in the near term. Nevertheless, Deere remains well poised for long-term growth backed by population and urbanization growth.
Exelon’s shares have gained +30.4% in the past year, outperforming the S&P 500 which has gained +2.9% over the same period. Although Exelon’s earnings per share during the fourth quarter were in line with estimates, the bottom line improved from the year-ago level. The improvement was due to new rates at PHI and higher energy efficiency earnings at ComEd.
The Zacks analyst thinks Exelon is likely to benefit from its $23-billion planned capital investment, focus on zero-emission electricity generation and cost savings. The company continues with its hedging program to manage market risks and protect the value of its generation. Strong cash flow generation capacity will help it lower debt levels and increase value of its shareholders.
However, Exelon is subject to the impact of commodity price volatility and price fluctuation in the wholesale markets. Stringent government regulation is also a cause of concern.
Other noteworthy reports we are featuring today include Monster Beverage (MNST), Hormel Foods (HRL) and Newmont (NEM).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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>>>