Today's Must Read
Subscriber Growth to Drive T-Mobile (TMUS) Amid Competition
Pre-Salt Reserves Boosts Petrobras (PBR), Debt Pile Hurts
Friday, March 15, 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), T-Mobile (TMUS) and Petrobras (PBR). 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 Zacks Electric Power industry in the past year, gaining +18.6% vs +14%. 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 has 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 T-Mobile have outperformed the Zacks National Wireless industry over the past year, gaining +11.7% vs. +0.9%. T-Mobile has received shareholder approval for its merger with Sprint. This is a step forward in creating the New T-Mobile through which the wireless carrier aims to bring robust competition to the 5G era.
The New T-Mobile would have about 127 million customers and a strong closing balance sheet. The company has also collaborated with Ericsson and Nokia to accelerate the deployment of a nationwide 5G network. The Zacks analyst thinks T-Mobile’s network expansion strategy continues to be superior to its rivals.
However, a highly competitive and saturated U.S. wireless market remains a major headwind. Intensifying competition could limit the company’s ability to attract and retain customers and may adversely affect its operating results. T-Mobile launched several low-priced service plans which have enhanced revenues but not significantly improved the bottom line.
Petrobras’ shares have outperformed the Zacks Emerging Markets Integrated Oil industry over the past three months, gaining +23.1% vs. +15.5%. While Petrobras recently reported weaker-than-expected Q4 earnings triggered by lower production, impairments and legal charges, results were strong overall.
In particular, Petrobras' upstream profit soared year over year thanks to steady commodity price recovery that lead to meaningful improvements in net income and EBITDA. The Zacks analyst thinks the largest oil company in South America also stands to benefit from Brazil’s economic growth and huge pre-salt oil reserves.
However, it was another quarter that production weakness clipped profits and cut into overall gains from rising oil prices. Moreover, the company's downstream business – consisting of the refining and marketing activities – suffered from weak oil products sales margins.
With the largest debt load in the oil industry, coupled with years of mismanagement and corruption, investors are advised to wait for a better entry point before buying shares.
Other noteworthy reports we are featuring today include Intuitive Keurig Dr Pepper (KDP), Carnival (CCL) and United Continental (UAL).
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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>>>