Today's Must Read
Emerging Markets Growth to Propel PepsiCo's (PEP) Revenues
Operational Efficiency Aid BHP Group (BHP), Low Prices Ail
Friday, December 6, 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 Apple (AAPL), PepsiCo (PEP) and BHP Group (BHP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple’s shares have outperformed the broader S&P 500 index year to date (68.3% vs. 23.3%). The Zacks analyst believes that Apple is benefiting from continued momentum in the Services segment and improved iPhone sales, owing to the trade-in programs.
Non-iPhone devices continue to perform well, driven by strong demand for iPad, Apple Watch and AirPods. The company’s expanded portfolio that now includes new MacBook Pro, Apple Watch Series 5 and streaming service Apple TV+ is a key catalyst. Moreover, iPhone sales are expected to improve in China with the new iPhone models.
Nevertheless, uncertainties over the timeframe of the resolution of the U.S.-China trade war do not bode well for the company. Further, antitrust investigations, App Store-related lawsuits and Spotify’s complaint increase legal woes.
Shares of PepsiCo have lost 0.1% in the past three months against the Zacks Soft Drinks Beverages industry’s fall of 0.3%. The Zacks analyst believes that adverse currency rates are likely to hurt the company’s results in 2019.
Unfavorable impacts of ongoing investments to strengthen business, higher tax rate, and the absence of asset sale and refranchising gains that occurred in 2018 are likely to hurt PepsiCo’s earnings in 2019. However, the company reported earnings and sales beat in third-quarter 2019, driven by strength in all segments and robust pricing. This marked its ninth sales beat in the last 11 quarters, with positive earnings surprise in 14 of the last 15 quarters.
The company’s productivity savings goal of at least $1 billion annually through 2023 bodes well. Moreover, PepsiCo now expects organic revenues for 2019 to meet or exceed 4% growth stated previously.
BHP's shares have lost 5.4% over the past six months against the Zacks Mining - Miscellaneous industry's fall of 1.6%. The Zacks analyst believes that BHP Group is poised to gain from its investment plans in petroleum, copper, iron ore and potash.
BHP Group anticipates unit costs to be higher in fiscal 2020 thanks to natural field decline at conventional petroleum, falling copper grades, lower by-product credits and higher deferred stripping costs at Escondida. Trade volatility and slowdown in global growth have made investors apprehensive and affected commodity markets, which in turn will weigh on BHP Group’s results.
Iron ore prices have declined lately amid signs of recovery in Brazilian supply. However, metal prices will recover eventually driven by demand-supply imbalance. Further, the company’s efforts to make operations efficient by adopting smarter technology across its value chain will also drive results. Strong cash flow and lower debt also bode well.
Other noteworthy reports we are featuring today include S&P Global (SPGI), Canadian National Railway (CNI) and Schlumberger (SLB).
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.6% per year.
These 7 were selected because of their superior potential for immediate breakout.
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>>>