Thursday, October 28, 2021
 

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the ongoing Q3 earnings season, in addition to new research reports on 16 major stocks, including Berkshire Hathaway Inc. (BRK.B), Visa Inc. (V), and Novartis AG (NVS). 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 >>>
 

The Scorecard (as of Thursday, October 28th)

Including all of this morning's results, we now have Q3 results from 244 S&P 500 members or 48.9% of the index's total membership. Total Q3 earnings for these 244 companies are up +34.2% from the same period last year on +14.4% higher revenues, with 82.4% beating EPS estimates and 73.8% beating revenue estimates.

Comparing the Q3 results from these 244 index members with what we had seen from the same group of companies in other recent periods, the EPS beats percentage of 82.4% compares to 91% in the preceding period (2021 Q2), 86.9% in 2021 Q1 and a five-year average of 78%.

The Q3 revenue beats percentage of 73.8% compares to 87.7% for the same group of companies in 2021 Q2, 79.9% in 2021 Q1 and the five-year average of 69.9%. In other words, not only has the growth prace decelerated from the first half's pace, but the beats percentages also below what we saw in the first half of the year. 

Shares of Berkshire Hathaway have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+42.8% vs. +34.2%). The company is one of the largest property and casualty insurance companies measured by premium volume. The Zacks analyst believes that Berkshire's inorganic growth story remains impressive with strategic acquisitions.

A strong cash position supports earnings-accretive bolt-on buyouts and indicates the company's financial flexibility. Continued insurance business growth fuels increase in float, drive earnings and generates maximum return on equity. The non-insurance businesses are delivering improved results with increased revenues over the past few years. A sturdy capital level provides further impetus.
 

However, exposure to catastrophe loss induces earnings volatility and also affects the property and casualty underwriting results of Berkshire. Huge capital expenditure remains a headwind for the company.
 

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

Shares of Visa have outperformed the Zacks Financial Transaction Services industry over the past year (+16.7% vs. -1.9%). The Zacks analyst believes that numerous acquisitions and alliances have paved the way for the company’s long-term growth and consistently drove revenues. It continues to invest in technology to boost its already leading position in the payments market. Shift in payments to the digital mode is a boon too.
 

The coronavirus vaccine development and the gradual revival of consumer confidence will drive spending, expanding business volumes in turn. Backed by its strong cash position, the company remains committed to boost its shareholder value. However, high operating expenses stress the operating margins. Ramped-up client incentives will dent the top line. A sluggish cross-border business due to the pandemic too looms on.
 

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

Shares of Novartis have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+6.0% vs. +25.4%), however, things seem to be improving for it. The Zacks analyst believes that solid momentum in key brands like psoriasis drug Cosentyx, Entresto, gene therapy Zolgensma, the oncology portfolio, and the launch of Kesimpta should boost Novartis’ performance in the near term.
 

The launch of additional drugs like Piqray and Mayzent should further enhance sales. The struggling Sandoz business is also showing signs of recovery as the business is starting to stabilize. However, some units of the oncology and generics businesses are still being affected by the COVID-19 pandemic. Generic competition for key drugs also remains a concern.
 

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

Other noteworthy reports we are featuring today include Uber Technologies, Inc. (UBER), Advanced Micro Devices, Inc. (AMD) and Deere & Company (DE).
 

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>>>