Today's Must Read
Loan Growth and Streamlining Support Wells Fargo (WFC)
Low Debt Aid Vale (VALE), Brumadinho Impact an Overhang
Thursday, November 14, 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 Walt Disney Company (DIS), Wells Fargo (WFC) and Vale (VALE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Disney’s shares have underperformed the Zacks Media Conglomerates industry year to date (35.7% vs. 38.2%). The Zacks analyst believes that Disney will benefit from its solid slate of theatrical releases in the near term.
Disney reported impressive fourth-quarter fiscal 2019 results, driven by a solid top-line performance in the Studio Entertainment and DTC businesses. However, higher operating losses in the DTC segment and Media Networks’ operating income decline hurt profitability.
Moreover, Disney+ has gained more than 10 million subscribers within 24 hours of its launch, making it a key catalyst for the company’s prospects. However, the company anticipates higher operating losses in the DTC & International segment due to the ongoing investments. Moreover, increasing operating expenses related to domestic parks and resorts are expected to negatively impact profitability.
Shares of Wells Fargo have gained 16.3% in the past six months against Zacks Major Regional Banks industry’s rise of 15.2%. The Zacks analyst believes that the company’s third-quarter earnings reflected lower net interest income, along with escalated costs and provisions, partly offset by high fee income.
Wells Fargo’s earnings surprise history remains impressive, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Though the company's investment in the businesses to enhance compliance and risk-management capability seems impressive, Wells Fargo has been slapped with several sanctions, including a cap on asset growth, which continues on the CFPB's dissatisfaction with the bank’s progress on fixing risk-management issues.
Also, rising costs curb bottom-line expansion. Recently, Wells Fargo appointed Charles W. Scharf as its second CEO post public and political outrage concerning the sales scam in 2016.
Vale’s shares have gained 2.3% over the past three months against the Zacks Basic Materials sector’s rise of 6.6%. The Zacks analyst believes that the company is likely to incur significant expenses for remediation actions following the dam failure.
Vale’s third quarter-2019 earnings and revenues both improved from the prior-year quarter but lagged the Zacks Consensus Estimate on both counts. The company trimmed 2019 iron ore and pellets sales guidance to 307-312 Mt. Lower commodity prices owing to a slowing global economy and trade dispute remain headwinds. Revenues in fiscal 2019 will be lower thanks to suspended operations following the Brumadinho disaster.
Nevertheless, Vale strives to deliver the highest possible margins by focusing on product line, improving productivity, controlling costs, better price realization, to name a few. Vale is also likely to gain from investment in projects, lower debt, efforts to ramp up coal business and transforming base metals business.
Other noteworthy reports we are featuring today include Public Storage (PSA), Shopify Inc. (SHOP) and TELUS (TU).
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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>>>