Today's Must Read
Southern Company (SO) Buoyed by Regulated Customer Growth
Sling TV Subscriber Growth, Pay-TV Resizing Aids DISH (DISH)
Wednesday, January 29, 2020
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 Fomento Economico Mexicano (FMX), Southern Company (SO) and DISH Network (DISH). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Fomento Economico’s shares have underperformed the Zacks Soft Drinks Beverages industry over the past year (+2.6% vs. +16.3%). The Zacks analyst believes that the company’s growth via acquisition strategy is reaping benefits. Its sound fundamentals and growth efforts position it for growth ahead.
The recent acquisition of minority stake in Jetro Restaurant Depot, AGV and 40% stake in Grupo Socofar, as well as joint venture with Raízen reveal its commitment to invest in the expansion of core businesses. Furthermore, its third-quarter 2019 results reflect significant strength across all businesses.
However, the company witnessed soft operating results across some divisions in the past few quarters. Operating margins at FEMSA Comercio’s Health and Proximity Divisions in third-quarter 2019 were hurt by operating expense deleverage in these units. Tariff-related and higher input costs are headwinds hurting its bottling unit.
Shares of Southern Company have gained +26.7% in the past six months against the Zacks Electric Power industry's rise of +14.8%. The Zacks analyst believes that leveraging the demographics of its operating territories, as in healthy population and job growth, the firm has gradually increased its customer base.
With good rate base growth and constructive regulation, Southern Company is expected to generate steady earnings and dividend growth in the coming years. However, elevated leverage of the firm, along with continued timing and cost overrun issues over its Vogtle project, are major overhangs.
While the electric utility holding company’s debt-to-capital ratio of 57% restricts financial flexibility, its $25-billion Vogtle nuclear plant has already exceeded budget and is years behind schedule. As such, Southern Company warrants a cautious stance from the investors.
DISH’s shares have gained +6.9% over the past three months against the Zacks Cable Television industry's rise of +1.7%. The Zacks analyst believes that DISH’s efforts to diversify its business from being a pure-play satellite-TV operator to an Internet TV operator are noteworthy.
The Sling TV subscriber base is also expanding. The company recently raised Sling TV prices and also introduced channels. Further, its focus on acquiring and retaining subscribers, who will be profitable over the long term, is expected to drive growth.
Additionally, DISH is set to enter the U.S. wireless market as the fourth, nationwide, facilities-based network competitor by acquiring Sprint’s prepaid businesses and customers, and 14 MHz of nationwide 800 MHz spectrum. This is expected to drive DISH’s top line over the long haul.
Other noteworthy reports we are featuring today include NextEra Energy (NEE), Duke Energy (DUK) and Charles Schwab (SCHW).
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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>>>