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Q1 Scorecard and Analyst Research Reports for Alibaba, Verizon, Coca-Cola & Others

Tuesday, May 5, 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 Alibaba Group (BABA), Verizon Communications (VZ) and Coca-Cola (KO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Q1 Earnings Season Scorecard 

Including all of this morning's reports, we now have Q1 results from 320 S&P 500 members or 64% of the index's total membership that combined account for 78% of the index's total market capitalization.

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Total earnings or aggregate net income is down -12.7% on +0.2% higher revenues, with 66.9% beating EPS estimates and 61.3% beating revenue estimates.

The two largest earnings contributors to the index, Finance & Technology, are having the opposite effect on the aggregate growth picture, with Finance dragging it down and Technology pushing it higher. Excluding the Finance drag, Q1 earnings would be down only -3.6% (vs. -12.7%). But without the Tech support, Q1 earnings growth would be -18.4% (vs. -12.7%). 

Estimates for 2020 Q2 and full-year 2020 are still coming down, with Q2 earnings now expected to be down -38.7% on -9.4% lower revenues. For 2020, earnigns are now expected to be down -21.5% on -6.4% lower revenues. This approximates to index 'EPS' of $127.25 for 2020 vs. $162.16 in 2019 and $160.13 in 2021.  

Alibaba shares have performed strongly lately, but have lagged the Zacks Internet Commerce industry over the past year (+3.7% vs. +7%). The Zacks analyst believes that Alibaba continues to benefit from strong growth in metrics. Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance.

Its New Retail strategy is also gaining momentum. This is aiding growth in Tmall Import, Hema fresh food grocery business and Intime Department Stores. However, higher costs associated with new initiatives remain a major concern.

Also, uncertain economy and macro headwinds in China are major concerns. In addition, rising competition from e-commerce players poses a risk. However, the steady improvement in core commerce and strong cloud business remain positives.

(You can read the full research report on Alibaba here >>>)

Shares of Verizon have lost -6.1% over the past six months against the Wireless National industry’s fall of -13.4%. The Zacks analyst believes that Verizon’s focus on online content delivery, mobile video and online advertising will likely stoke future growth.

Despite worldwide mayhem induced by the coronavirus pandemic, Verizon started 2020 on a positive note, reporting relatively healthy first-quarter 2020 results primarily led by the wireless business. Verizon is also changing its revenue mix toward newer growth services like cloud, security and professional services.

However, the company continues to struggle in a competitive U.S. wireless market with muted demand and tweaked 2020 guidance amid the coronavirus-led turmoil. The company's wireline division is struggling with losses in access lines due to competitive pressure from VoIP service providers. In addition, Verizon is spending heavily on promotion and lucrative discounts to woo customers, which further erodes profitability.

(You can read the full research report on Verizon here >>>)

Coca-Cola’s shares have lost -22.7% over the past three months against the Zacks Soft Drinks Beverages industry’s fall of -19.3%. The Zacks analyst believes that the company is gaining from the effective execution of strategies to evolve as a consumer-centric total beverage company.

Coca-Cola 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. However, innovation and investment in core categories and brands have been the key focus areas, which led to the expansion of retail value share. 

(You can read the full research report on Coca-Cola here >>>)

Other noteworthy reports we are featuring today include AT&T (T), Tesla (TSLA) and Charter Communications (CHTR).

Breakout Biotech Stocks with Triple-Digit Profit Potential

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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.

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Sheraz Mian

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>>>

Today's Must Read

Alibaba (BABA) Drives On Cloud Growth; Investments Hurt

Verizon (VZ) Gains Traction with Focus on High-Growth Sector

Coronavirus Boosts Coca-Cola's (KO) E-commerce, To Hurt in Q2

Featured Reports

AT&T (T) Rides on Streaming Services, 5G Deployments

Per the Zacks analyst, AT&T is well positioned to benefit from streaming services like AT&T TV and soon-to-be launched HBO Max.

Tesla (TSLA) to be Aided by Model 3/Y Demand Amid High Capex

Rising deliveries of Model 3 and the latest Model Y are aiding Tesla's top-line growth. However, high capex for product and capacity expansion may hurt cash flow, per the Zacks analyst.

Mobile & Internet Subscriber Gain Benefits Charter (CHTR)

Per the Zacks analyst, higher subscriber strength in residential and commercial internet services is driving Charter's top line.

Steady Demand Aids American Tower (AMT) Amid Churn Concerns

Per the Zacks Analyst, American Tower is witnessing robust tower demand, owing to a surge in mobile data usage and 4G densification.

Express Scripts Acquisition, Revenue Growth Aid Cigna (CI)

Per the Zacks analyst, the buyout of Express Scripts has diversified Cigna's operations opening up new revenue streams.

Southern Company (SO) Buoyed by Regulated Customer Growth

The Zacks analyst believes that increase in Southern's regulated business customer base will support its revenue growth but is concerned over timing and cost overrun related to Vogtle project.

Positive Budget Aid Northrop (NOC) Amid Increasing Costs

Per the Zacks analyst, expansionary defense budget proposals by the U.S. government should bring more contracts for Northrop.

New Upgrades

Hain Celestial's (HAIN) Transformation Strategy Bodes Well

Per the Zacks analyst, Hain Celestial is benefiting from its transformation efforts. The strategy is focused on simplifying portfolio and identifying areas of productivity savings.

Growing Revenues, Strategic Buyouts Aid Ensign Group (ENSG)

Per the Zacks analyst, a series of strategic acquisitions along with its Medicaid and Medicare businesses has contributed to its revenue stream, which in turn bode well for the long haul.

Pipeline Progress to Boost Spectrum Pharma (SPPI)

Per the Zacks analyst, Spectrum's pipeline progress bode well for its prospects. Moreover, target markets represent immense commercial potential.

New Downgrades

Rising Costs, Low Rates Remain Woes for TCF Financial (TCF)

Per the Zacks analyst, rising expenses due to TCF Financial's investment in business infrastructure hurt bottom-line growth. Net interest income remains under pressure due to the low rate environment.

Weak End Markets to Hurt Carpenter Technology (CRS)

The Zacks analyst remains concerned that weakness in industrial, transportation and energy end markets amid the coronavirus pandemic will continue to dent Carpenter Technology's results.

Increased Import Tariff on Aluminum Hurt Triumph Group (TGI)

Per the Zacks analyst, enhanced tariff on import of steel and aluminum hurt growth prospects for equipment manufacturing stocks like Triumph Group. Its unfavorable debt ratios also pose risk.


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Verizon Communications Inc. (VZ) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
AT&T Inc. (T) : Free Stock Analysis Report
 
Coca-Cola Company (The) (KO) : Free Stock Analysis Report
 
Charter Communications, Inc. (CHTR) : Free Stock Analysis Report
 
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
 
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