Today's Must Read
Robust Content Aids Netflix (NFLX) Amid Stiff Competition
Accenture (ACN) Rides on Acquisitions Amid Pricing Pressure
Thursday, June 13, 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 Visa (V), Netflix (NFLX) and Accenture (ACN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Visa’s shares have outperformed the Zacks Financial Transaction Services industry in the past year, gaining +27.7% vs. a +19.7% increase. The Zacks analyst thinks the company is gaining from consistent growth in payments volume, cross-border volume and processed transactions.
Numerous strategic acquisitions and alliances plus technology upgrades and effective marketing have paved the way for long-term growth and a consistent increase in revenues. The acquisition of Visa Europe is a long term growth strategy for the company. Its international business has been expanding and adds diversification benefits.
Visa is well-poised to gain from the growing electronic payment processing and a solid brand name. Its strong capital position facilitates business investments. Nevertheless, high client incentives and operating expenses weigh on its operating margins. Adverse foreign exchange volatility imparts instability to the company’s earnings.
Shares of Netflix have gained +29.1% year to date, outperforming the Zacks Broadcast Radio and Television industry’s rally of +22% during the same period. The Zacks analyst thinks the company’s strong subscriber addition rate reflects growing appeal of the streaming platform, primarily driven by a solid content portfolio.
This is also helping the company counter competition from the likes of YouTube, HBO and Amazon Prime video. Reportedly, the company is set to launch video games based on its popular shows like Stranger Things. The initiative is expected to create a buzz that is likely to drive the stock. However, Netflix’s weak guidance for second-quarter U.S. streaming paid net additions, due to a price hike, is a concern.
Moreover, high streaming content obligations and increased spending related to the gaming endeavor is expected to hurt cash flow generation. In fact, higher cash burn rate in 2019 is a major headwind.
Accenture’s shares have outperformed the Zacks Consulting industry year to date, gaining +30.9% vs. +28.7%. The Zacks analyst thinks Accenture has been steadily gaining traction in its outsourcing and consulting businesses. It has been strategically enhancing its cloud and digital marketing suite through acquisitions and partnerships.
The company’s strong operating cash flow has helped it reward its shareholders in the form of dividends and share repurchases. Further, it has enabled Accenture to pursue opportunities in areas that show true potential. Accenture is currently a global leader in the Salesforce implementation service space.
On the flip side, Accenture continues to face pricing pressure due to significant competition from strong companies like Genpact, Cognizant and Infosys. Global presence exposes Accenture to foreign currency exchange rate fluctuations. Buyout-related integration risks can impact the company’s organic growth.
Other noteworthy reports we are featuring today include Novartis (NVS), ConocoPhillips (COP) and BlackRock (BLK).
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1% and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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>>>