Today's Must Read
Dominion (D) Gains from Investments, Share Dilution a Concern
Honda (HMC) to Gain From Vision 2030 Plan, Recalls a Woe
Friday, May 10, 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 AT&T (T), Dominion Energy (D) and Honda (HMC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
AT&T’s shares have lost -4.7% over the past year, underperforming the Zacks Wireless National industry's increase of +8%. AT&T reported strong first-quarter 2019 results driven by solid domestic wireless business and incremental contribution from WarnerMedia assets.
The Zacks analyst thinks the company will continue its growth momentum through 2019 as it remains poised to benefit from the impending 5G boom and extended LTE coverage, while focusing on reducing its huge debt burden. AT&T also aims to reinvent digital advertising and give a new dimension to its business model with integrated business platforms.
AT&T is facing a steady decline in linear TV subscribers and legacy services. The company’s wireline division is facing losses in access line due to competitive pressure from voice-over-Internet protocol service providers. As AT&T tries to woo customers with discounts, freebies and cash credits, margin pressures tend to soar.
Shares of Dominion Energy have gained +14.4% over the past year, outperforming the Zacks Electric Power industry, which has increased +11.1% over the same period. Dominion Energy’s first-quarter earnings and revenues lagged estimates due to mild weather in Virginia and South Carolina, which in turn largely impacted demand.
The Zacks analyst thinks Dominion Energy is benefiting from its regulated growth projects and synergies from acquisition. The company’s expansion of electric transmission, natural gas facilities and midstream assets are strong positives. The company’s completion of its merger with SCANA became immediately accretive to earnings and will likely boost the bottom line further over the long term.
However, Dominion Energy’s future earnings may get affected due to increase in pension expenses and share dilution. The company and its gas unit’s dependency upon third-party producers for natural gas supply increases risk. Any delay in ongoing capital projects may impact Dominion Energy’s profitability.
Honda’s shares have outperformed the Zacks Foreign Automotive industry over the past year, losing -20.8% vs. -28.5%. In fourth-quarter fiscal 2019, Honda’s operating profit declined 66.6% year over year. This decline resulted from the adverse effects of foreign currency and impact of changes in the global automobile production network and capability in Europe.
These negative factors were partly offset by continuous cost-reduction efforts. The Zacks analyst likes Honda’s Vision 2030 strategy, through which the company aims to boost coordination between research and development as well as procurement and manufacturing of products. However, frequent cases of recall are concerns for the company.
Other noteworthy reports we are featuring today include Marathon Petroleum (MPC), Public Service Enterprise (PEG) and Sprint (S).
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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>>>