Chicago, IL – January 18, 2016– Zacks Equity Research highlights Sempra Energy (SRE) as the Bull of the Day and Southern Copper (SCCO) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onNetflix, Inc. (NFLX), Amazon.com (AMZN) and Time Warner ( TWX). Here is a synopsis of all five stocks: Bull of the Day: It has been a rough start to the year with major indexes plummeting across the board. This has forced investors to look to safer avenues for investments, like those in the utility space. Stocks here were initially shunned on fears of rising rates, but those worries appear to be distant memories now, as the 10 year Treasury bond hits 2% at time of writing. This is making many investors rethink their position on the low beta utility world including companies like Sempra Energy ( SRE). Sempra Energy in Focus Sempra might not be the most well-known utility company out there but it is no small cap either with a market cap of over $23 billion. But you might be more familiar with the company if you live in Southern California as Sempra offers natural gas and electricity to the broader San Diego and Los Angeles markets, though it also has a global division as well. Either way, the real promise of the company lies in its lower risk nature, and especially in today’s rocky market. The company’s stock has a beta of just 0.44 while it pays out a robust 3% dividend yield on an annual basis, two key factors that investors need to pay attention to right now. Other Factors Beyond its lower risk and more stable nature, investors should also to recent earnings estimates which are pretty favorable for SRE. The current quarter estimate has been on the rise, by about 2.3%, in the past sixty days, while we have seen a similar move in the next year time frame too. Plus, more recent estimates have been more bullish, as the most recent earnings consensus for both the current quarter and current year is higher than the full 90 day consensus. This suggests that analysts are really starting to like what they see from this company and are adjusting their predictions as a result. But who can blame them given SRE’s stellar record when it comes to earnings season? The company didn’t miss in its last four reports, while it is posting an average beat of nearly 16% in the last four quarters too. Bear of the Day : Falling commodity prices and weak global economic trends have created a very It has been a truly awful time to be in the commodity business. Sluggish manufacturing numbers at home and poor growth prospects in key markets abroad like China are pushing prices for a variety of products sharply lower. Take copper for example, where prices have cratered from close to $3/lb. to below $2/lb. in just the past year, to mention nothing of copper’s five year high which was close to $4.5/lb. And with lackluster industrial production and little hope for another growth spurt from China , the outlook for copper and other industrial metals is quite poor. This has obviously had a devastating impact on companies which produce in this space, such as Southern Copper (SCCO). SCCO in Focus Southern Copper mines, explores and refines copper in a number of Latin American countries including Peru, Mexico, and Argentina just to name a few. Like many other companies in the space, this has been beaten down lately including a 12% loss in the past month and a 22% slide in the past six months. But while things have been bad already, there are plenty of reasons to think that more pain is ahead if we look to recent earnings estimate revisions. Not a single analyst estimate has gone higher in the past sixty days for any of the time periods we study, including two lower for both the current year and next year. The magnitude of these cuts has also been extreme with the current quarter falling by 25% over the past two months and the full year slumping by 7% in the same time frame. With this kind of bearish outlook and a recent history of big misses at earnings season, it should be no surprise that SCCO has recently moved down to a Zacks Rank #5 (Strong Sell) and that we are looking for more underperformance from this security in the near future. Additional content: Will Netflix (NFLX) Keep the Earnings Streak Alive? Netflix, Inc. (NFLX) is set to report fourth quarter 2015 results on Jan 19, after the closing bell. In the last quarter, the company delivered a positive earnings surprise of 50%. The company has delivered positive earnings surprises in the last four quarters, with an average beat of 24.17%. Let’s see how things are shaping up for this announcement. Why a Likely Positive Surprise? Zacks ESP: Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +50.00%. This is a meaningful and leading indicator of a likely positive surprise for the company. Zacks Rank: Netflix carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 and 3 have a significantly higher chance of beating estimates. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum. The combination of Netflix’s Zacks Rank #3 and +50.00% ESP makes us confident in looking for a positive surprise. What is Driving the Better-than-Expected Earnings? Netflix has been benefiting from its rapid international expansion along with its initiatives to improve its content especially with original series. This allows the company to both attract and retain users. In addition, the company has been leveraging the scope for growth in the international streaming market given the ongoing demand shift from traditional cable TV to subscription video on demand (SVOD). Recently, the company expanded its services to cover about 190 countries across the globe, which will likely give a huge boost to its user base. Furthermore, Netflix is also working to add more regional languages. In addition to the 17 languages it already caters to, the company has added Arabic, Korean and Chinese (both simplified and traditional) recently. The company had also declared that in 2016 it will be bringing out as many as 31 original series (including both new and sequels), about 24 original feature films and documentaries, 30 original kids series and even a number of stand-up comedy shows. However, with so much going on, Netflix’s content acquisition cost have been escalating rapidly. Competition is also heating up with players like Amazon.com (AMZN) and Time Warner’s ( TWX) HBO ramping up their efforts to get a bigger share of this pie. Moreover, amid this competition and pricing pressure, Netflix is set to raise the price of its most popular subscription plan (by $1 a month to $9.99) for users in the U.S., Canada and some Latin American countries. The full impact of the price hike on demand can only be determined once the grace period is over. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> About the Bull and Bear of the Day Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months. About the Analyst Blog Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets. About Zacks Equity Research Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term. Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons. Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today. Find out What is happening in the stock market today on zacks.com.
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SEMPRA ENERGY (SRE): Free Stock Analysis Report
SOUTHERN COPPER (SCCO): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
AMAZON.COM INC (AMZN): Free Stock Analysis Report
TIME WARNER INC (TWX): Free Stock Analysis Report
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