Today's Must Read
Upstream Unit Buoys PetroChina (PTR) Amid Gas Import Losses
Robust Demand Aids Lockheed (LMT), F-35 program's Cost Hurts
Thursday, January 30, 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 Apple (AAPL), PetroChina (PTR) and Lockheed Martin (LMT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. We have also provided below an update on the ongoing Q4 earnings season.
Earnings Season Scorecard
Including all of today's earnings releases, we now have Q4 results from 199 S&P 500 members that combined account for 52.1% of the index's total market capitalization. Total earnings for these 199 index members are up +4.2% from the same period last year on +2.5% higher revenues, with 72.9% beating EPS estimates and 67.3% beating revenue estimates. This is better performance than we have seen from these companies in the first three quarters of the year.
Please check out our weekly Earnings Trends report to get a complete picture of the earnings picture here >>>Earnings Outlook Improving
Apple’s shares have outperformed the S&P 500 over the past year (+93.8% vs. +20.1%), with the momentum expected to continue on the back of the company's better than expected first-quarter fiscal 2020 results. The Zacks analyst credits Apple's outperformance in the quarterly report on continued momentum in the Services segment and a rebound in iPhone sales, which grew on a year-over-year basis.
Customer response was exceptional for new iPhone 11, 11 Pro and 11 Pro Max. Moreover, sales benefited from trade-in programs, which doubled on a year-over-year basis. Wearables’ top-line growth was aided by strong demand for Apple Watch and AirPod. AirPod sales benefited from the launch of AirPod Pro, which features active noise cancellation.
Moreover, Apple Watch’s adoption rate grew rapidly. The solid adoption of Apple Watch is now helping the iPhone maker strengthen presence in the personal health monitor space. The Phase One deal between the United States and China is also a positive.
Shares of PetroChina have lost -14.9% in the past six months against the Zacks International Integrated Oil industry's decline of -10.7%. The Zacks analyst believes that there are concerns regarding drop in the company’s downstream segment earnings owing to higher domestic refined products oversupply & narrowing profit margin. Losses on the domestic resale of imported natural gas below cost also keep shareholders worried.
PetroChina has managed to lower its exploration & development cost as a means to shore up profitability. On that front, a tight leash on oil & gas lifting costs helped the company lower the expenditure thereby boosting its upstream earnings outlook. Its natural gas business offers lucrative growth prospects in the coming years as China moves from coal to natural gas.
Lockheed’sshares have gained +14.9% over the past three months against the Zacks Aerospace Defense industry's rise of +1.6%. The Zacks analyst believes that Expansionary budgetary provisions made by the current U.S. administration will immensely boost this defense prime's business.
Lockheed Martin ended the fourth quarter of 2019 on an impressive note, with both earnings and revenues surpassing the Zacks Consensus Estimate. The company, being the largest defense contractor in the world, enjoys strong demand for its high-end military equipment in domestic and international markets.
However, the company’s higher debt-to-equity ratio shows that the stock is highly leveraged when compared with its industry. Lockheed Martin also faces intense global competition for its broad portfolio of products and services. Furthermore, forced cost reduction initiatives for the F-35 program might hamper its operating results.
Other noteworthy reports we are featuring today include Morgan Stanley (MS), The Bank of New York Mellon (BK) and Square (SQ).
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
Director of Research
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>>>