Today's Must Read
Coca-Cola (KO) Boosts Digital Investments Amid Coronavirus
Upstream Unit Buoys PetroChina (PTR) Amid Gas Import Losses
Monday, May 18, 2020
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily provides a real-time update on the Q1 earnings season, in addition to featuring new research reports on 16 major stocks, including NVIDIA (NVDA), Coca-Cola (KO) and PetroChina (PTR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Q1 Earnings Season Scorecard
For the 453 S&P 500 members that have reported Q1 results already, earnings are down -11.1% on +1.2% higher revenues, with 67.1% beating EPS estimates and 57.4% beating revenue estimates.
The pademic-related shelter-in-place policies took effect only in the last few weeks of the quarter, but the current period (2020 Q2) is expected to experience the brunt of Covid-related disruptions.
As a result, estimates for Q2 and the remainder of the year have been steadily coming down lately, though the pace of cuts has eased to some extent in recent days as the bulk of the Q1 reporting cycle has come to an end.
S&P 500 earnings are now expected to be down -42.3% in Q2, -23.8% in Q3 and -12.9% in 2020 Q4.
Today's Featgured Reports
NVIDIA’s shares have outperformed the Zacks General Semiconductor industry over the past year (+132.2% vs. +49.5%), with the stock benefiting from strong growth in GeForce desktop and notebook GPUs, which is boosting gaming revenues.
Moreover, an increase in Hyperscale demand remains a tailwind for the Data Center business. Further, the solid uptake of AI-based smart cockpit infotainment solutions is a boon. Additionally, strength across desktop workstation products is aiding Professional Visualization revenues.
However, in the near term, management expects a $100-million negative impact of the coronavirus menace on revenues. Moreover, the U.S.-China trade war remains a key concern. Also, lower demand for notebook workstations might be a near-term hindrance.
Shares of Coca-Cola have lost -15.1% over the past six months against the Zacks Soft Drinks Beverages industry’s fall of -12.6%. This modest underperformance notwithstadning, the Zacks analyst believes that innovation and investments in core categories and brands should remain key focus areas for the company, which should lead to the expansion of retail value share. It is gaining from the effective execution of strategies to evolve as a consumer-centric total beverage company.
The company continued with its earnings beat streak for the second straight quarter in first-quarter 2020. Despite a beat, its top line declined in the first quarter as gains from a strong start to 2020 were offset by disruptions in the latter half of the quarter due to the coronavirus pandemic.
It witnessed a decline in unit case volume, while price/mix and concentrate sales remained flat. The company expects the pandemic to significantly hurt second-quarter results. Also, adverse currency impacts are likely to persist.
PetroChina’s shares have lost -19.2% over the past three months against the Zacks International Integrated Oil industry’s fall of -33.8%. The Zacks analyst believes that limited international operations and losses on gas imports give investors more reason to be cautious on the stock.
With higher production and lower lifting costs supporting the state-run giant's upstream unit, the stock might gain further. PetroChina's E&P segment posted 6.1% increase in production in the first 3 months of 2020, while oil and gas lifting costs fell 8.9% from what it averaged in the March quarter of last year.
However, the historic oil price crash has hit PetroChina hard. Further, in a sign of weakness in the company’s downstream business, earnings plunged due to depressed domestic product demand, lower refined products sales and drop in price.
Other noteworthy reports we are featuring today include QUALCOMM (QCOM), CVS Health (CVS) and Zoom Video Communications (ZM).
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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>>>