Today's Must Read
Starbucks' (SBUX) Strong Global Footprint to Drive Growth
Diageo's (DEO) Focus on Premium Brands to Boost Growth
Thursday, December 5, 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 ExxonMobil (XOM), Starbucks (SBUX) and Diageo (DEO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
ExxonMobil’s shares have outperformed the Zacks Integrated International Oil industry year to date (0.7% vs. -4.3%). The Zacks analyst believes that ExxonMobil’s bellwether status in the energy space and optimal integrated capital structure have helped it come up with industry-leading returns.
Moreover, the management’s track record of capex discipline across the commodity price cycle make it a relatively lower-risk energy sector play. Notably, the company owns some of the most prolific upstream assets globally, with a number of major projects slated to come online over the next few years. Since 2018, ExxonMobil has made several oil discoveries in offshore Guyana.
The firm estimates 750,000 barrels of oil production per day from the region by 2025. However, the integrated energy player’s downstream & chemical units significantly underperformed in the first nine months of 2019. The units are unlikely to recover in the fourth quarter owing to scheduled maintenance activities.
Shares of Starbucks have lost 10.8% in the past three months against the Zacks Food & Restaurants industry’s fall of 9.8%. The Zacks analyst believes that Starbucks’ operating fundamentals such as solid global footprint, successful innovations, best-in-class loyalty program and digital offerings remain tailwinds.
The company recently, reported fourth-quarter fiscal 2019 results, wherein earnings met the Zacks Consensus Estimate, after outpacing the same for five straight quarters. Meanwhile, revenues surpassed the consensus mark during the reported quarter. The biggest takeaway from the quarter was increase in traffic.
The company anticipates global comps growth in the range of 3-4% in fiscal 2020. Meanwhile, Starbucks' business is rapidly growing in China, courtesy of innovative store designs and the success of the MSR program.
Diageo's shares have lost 5.4% over the past six months against the Zacks Alcoholic Beverages industry's fall of 1.6%. The Zacks analyst believes that the company’s focus on achieving growth via acquisitions is yielding results.
Diageo has surpassed the industry in the past year, driven by its expansion and innovation strategy. This also aided sales and earnings growth of the company in fiscal 2019. Earnings and sales also improved from robust organic growth, backed by broad-based gain across regions and categories. Diageo remains focused on expanding the fastest-growing premium spirits brands by resource optimization, which should drive growth and boost shareholder value.
The company reiterated its medium-term sales and operating margin growth targets. However, cost inflation and higher marketing expenses partly offset margins, which should continue in fiscal 2020. It expects a slowdown in sales growth in fiscal 2020 due to the lapping of several innovation launches in fiscal 2019.
Other noteworthy reports we are featuring today include Fidelity National Information Services (FIS), Sony (SNE) and Colgate-Palmolive (CL).
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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>>>