Buy Zee Entertainment; target of Rs 651: Centrum

Centrum's research report on Zee Entertainment

We maintain our BUY rating on Zee Entertainment Enterprises Ltd. (ZEEL) with a revised target price of Rs651. We believe there is upside risk to our ad growth expectation of 16% for FY19E on the back of strong market share gains across languages and increasing ad spends by FMCG companies. Further we believe the full impact of the TRAI tariff order would be in FY20 and the management is confident to deliver low teens growth on the back of ARPU increase. New channel launches would help the company complete its bouquet of languages and help in increasing ad inventory. Management strategy to do deals for ZEE5 with telecos only on favourable terms is healthy for long term while we believe the international launch by end of FY19 would be an added positive. We believe increase in ZEE5 originals and to premier movies on ZEE5 would help the company generate significant subscribers over medium term.

Outlook
We maintain our BUY rating and value the stock on Adj OCF/EV yield on 5 year avg cash flow and arrive at a TP of Rs651. Downside risk being uncertainty in implementation of Tariff Order and rollout of ZEE5.

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Read More First Published on Jul 20, 2018 05:19 pm

Microsoft (MSFT) Slips 0.78% Ahead of Earnings: What To Watch

Microsoft (MSFT ) saw its stock price dip 0.78% to hit $105.12 per share Wednesday, just one day before the tech power is set to report its Q4 fiscal 2018 financial results. So let’s take a look at what investors should expect from Microsoft after the closing bell Thursday.

Microsoft has jumped into new areas in order to adapt and grow, with a big push into artificial intelligence and IoT. The firm also competes against Amazon (AMZN ) , Oracle (ORCL ) , and Google (GOOGL ) in the cloud computing industry. Microsoft’s continued success in some of its more traditional businesses, coupled with its new-age ventures has helped its stock price climb roughly 98% over the last two years and 42% during the last 12 months.

Looking to MSFT’s Q4, our latest Zacks Consensus Estimates are calling for Microsoft’s revenues to climb by 18.24% to reach $29.21 billion. Meanwhile, the firm’s adjusted Q4 ESP figure is expected to hit $1.07 per share, which would mark over a 9% climb.

Investors should also note that Microsoft’s quarterly earnings revisions activity has been mixed recently. The company has received one downward earnings estimate revisions for Q4 within the last 30 days, along with one full-year upward change within the last seven days, which has helped contribute to its Zacks Rank #3 (Hold).

With all that said, we still need to gauge how likely the firm is to outperform estimates Thursday, and we can turn to our exclusive Earnings ESP figure to do so.

Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Microsoft’s Most Accurate Estimate—the representation of the most recent analyst sentiment—is calling for earnings of $1.08 per share, which is one cent better than our current consensus estimate. Furthermore, Microsoft currently sports an Earnings ESP of 0.37% and a Zacks Rank #3 (Hold), which means investors can reasonably expect that MSFT has a good chance to beat earnings estimates after the bell Thursday.

It is also worth noting that Microsoft has topped our bottom line estimates in 14 out of the last 15 quarters, including the trailing eight periods.

Make sure to check back here for our full analysis after Microsoft reports!

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Texas Instruments CEO Resigns Over Personal Conduct Violations

Texas Instruments (NASDAQ:TXN) President and CEO Brian Crutcher is no longer with the company.

Source: VEX Robotics via Flickr

According to a statement from the company, Texas Instruments CEO Brian Crutcher has resigned from his roles at the company after violating its code of conduct. The company doesn’t say exactly what happened, but it notes that the former CEO’s actions are not consistent with its ethics and core values.

With Brian Crutcher gone, Texas Instruments is reverting back to its previous President and CEO, Rich Templeton. Templeton will be taking over as the next Texas Instruments CEO and the company won’t be holding a search for another. He will also still remain the Chairman of the Board for TXN.

“For decades, our company’s core values and code of conduct have been foundational to how we operate and behave, and we have no tolerance for violations of our code of conduct,” Mark Blinn, lead director of the TI Board, said in a statement. “Over the past 14 years, Rich has successfully led TI to become the company it is today, and we have great confidence in his values and ability to continue to lead this company forward.”

Brian Crutcher’s time as Texas Instruments CEO was short. He had only been serving in these roles for less than two months when news of his resignation was announced. Luckily, Rich Templeton has 14 years of experience as TXN’s CEO and is able to easily take over the role.

TXN stock was down 1% as of Wednesday morning.

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Noodles & Co (NDLS) Stock Surges Ahead of Earnings

Noodles & Co (NASDAQ:NDLS) shares were on the rise as the company is expected to post strong earnings two days from now.

The fast-casual restaurant will not be reporting until after the market closes on Wednesday but the stock was upgraded by Zacks Investment Research early on Monday from a “hold” rating to a “buy” rating in a research report that the company sent to investors in the morning. Analysts from the firm have a price rating of $14 on the stock, which is currently selling at around $12.70 per share.

Noodles & Co recently announced that its outlook for its fiscal 2018 is slated to be in the range of a loss of a penny per share to a profit of 3 cents per share. For its most recent quarter, analysts are projecting the company to announce a profit of 2 cents per share.

The company’s most recent quarterly earnings report came on May 10, which yielded a loss of 4 cents per share for the period, below the Wall Street guidance of a loss of 3 cents per share. Noodles & Co also amassed revenue of $110.5 million for the period, below the consensus estimate of $107.8 million, with revenue falling 5.3% year-over-year.

NDLS stock gained more than 4.5% on Monday following the analyst upgrade and the fact that the company is expected to beat analysts’ expectations with its Wednesday earnings report.

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Tesla Hits 200,000 U.S. Deliveries, Triggering Federal Tax Credit Phaseout

Electric-car maker Tesla�(NASDAQ:TSLA) doesn't report monthly U.S. sales like other automakers do, believing that industry observers would overthink the figures. That's historically made it murky when trying to figure out when the company would reach 200,000 units in U.S. sales, the key threshold that triggers the phaseout of the U.S. federal tax credit of $7,500 that is available to electric car buyers.

Tesla just quietly confirmed that it delivered its 200,000th electric vehicle in the U.S.

Model 3. Image source: Tesla.

The phaseout begins

Tesla has now updated�its support page that details incentives within the U.S., noting that the full $7,500 credit is available for the remainder of 2018. As currently structured, the full credit is available for the quarter in which the 200,000th qualifying vehicle is delivered, as well as the subsequent quarter. For the next two quarters, 50% of the credit is available, followed by 25% of the credit for the two quarters after that.

Federal Tax Credit

For Vehicles Delivered

$7,500	On or before Dec. 31, 2018
$3,750	Jan, 1 to June 30, 2019
$1,875	July 1 to Dec. 31, 2019

Data source: Tesla.

As the company only sells electric vehicles, Tesla is the first automaker to hit the 200,000 threshold, but Nissan and General Motors aren't too far behind. It's worth noting that many states also offer various incentives in addition to the federal credit, and that GM is currently lobbying to have the credit expanded or extended.

There had been some speculation that Tesla was strategically delaying some deliveries in order to postpone hitting the 200,000 threshold. CEO Elon Musk tweeted in 2016 that the company would try to help as many people get the credit as possible.

@RGspan Our production ramp plan should enable large numbers of non X/S customers to receive the credit.

�� Elon Musk (@elonmusk) April 3, 2016

The company did report a remarkably high number of vehicles in transit at the end of the second quarter, comprised of nearly 3,900 Model S and Model X vehicles and over 11,100 Model 3 cars, fueling the theory that Tesla was trying to push the triggering event into July -- and into the third quarter.

Data source: SEC filings. Chart by author.

However, the spike in vehicles in transit could also be attributable to progress in ramping Model 3 production.

Potential effect on demand

The news has considerable impact on prospective Tesla customers that are factoring the hefty incentive into their purchasing decisions, particularly those interested in the most affordable $35,000 base Model 3, which Tesla is not yet producing. The full federal credit would theoretically bring the starting price of that base model down to $27,500, for instance, comparable with many mainstream midsize sedans from non-luxury brands.

Tesla expects to begin producing the base Model 3 with a standard battery in six to nine months, at which point half the federal credit will still be available. There are signs that Model 3 demand may not be as strong as hoped, potentially because many reservation holders are waiting for the more affordable version, and losing the federal tax credit is an incremental negative for demand.

HSBC (HSBC) Rating Increased to Overweight at JPMorgan Chase & Co.

HSBC (NYSE:HSBC) was upgraded by stock analysts at JPMorgan Chase & Co. from a “neutral” rating to an “overweight” rating in a research note issued to investors on Tuesday, The Fly reports.

HSBC has been the subject of a number of other research reports. Credit Suisse Group raised HSBC from an “underperform” rating to a “neutral” rating in a report on Thursday, April 19th. ValuEngine cut HSBC from a “strong-buy” rating to a “buy” rating in a report on Tuesday, April 3rd. Finally, Zacks Investment Research cut HSBC from a “hold” rating to a “sell” rating in a report on Wednesday, April 25th. One investment analyst has rated the stock with a sell rating, ten have given a hold rating and four have issued a buy rating to the company’s stock. The stock presently has a consensus rating of “Hold” and an average price target of $31.50.

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Shares of HSBC stock traded down $0.40 during trading on Tuesday, reaching $47.45. 1,196,197 shares of the company’s stock were exchanged, compared to its average volume of 1,667,157. The company has a debt-to-equity ratio of 0.35, a current ratio of 0.96 and a quick ratio of 0.96. HSBC has a 1-year low of $46.23 and a 1-year high of $55.89.

HSBC (NYSE:HSBC) last posted its quarterly earnings results on Friday, May 4th. The financial services provider reported $0.75 EPS for the quarter. The business had revenue of $13.71 billion for the quarter. sell-side analysts anticipate that HSBC will post 3.7 earnings per share for the current fiscal year.

A number of institutional investors and hedge funds have recently modified their holdings of the business. Jefferies Group LLC increased its holdings in HSBC by 13.6% in the 4th quarter. Jefferies Group LLC now owns 11,072 shares of the financial services provider’s stock worth $572,000 after purchasing an additional 1,327 shares in the last quarter. Cookson Peirce & Co. Inc. increased its holdings in HSBC by 0.6% in the 1st quarter. Cookson Peirce & Co. Inc. now owns 223,230 shares of the financial services provider’s stock worth $10,641,000 after purchasing an additional 1,350 shares in the last quarter. BTC Capital Management Inc. increased its holdings in HSBC by 13.1% in the 1st quarter. BTC Capital Management Inc. now owns 12,963 shares of the financial services provider’s stock worth $620,000 after purchasing an additional 1,503 shares in the last quarter. BB&T Securities LLC increased its holdings in HSBC by 4.5% in the 1st quarter. BB&T Securities LLC now owns 37,889 shares of the financial services provider’s stock worth $1,806,000 after purchasing an additional 1,621 shares in the last quarter. Finally, Checchi Capital Advisers LLC increased its holdings in HSBC by 8.7% in the 1st quarter. Checchi Capital Advisers LLC now owns 25,238 shares of the financial services provider’s stock worth $1,203,000 after purchasing an additional 2,011 shares in the last quarter. 2.61% of the stock is owned by institutional investors and hedge funds.

About HSBC

HSBC Holdings plc provides banking and financial products and services. The company operates through Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking segments. The Retail Banking and Wealth Management segment offers personal banking products and services, mortgages and loans, credit cards, insurance and investment products, savings products, international services, and wealth solutions and financial planning services, as well as telephone, Internet, and mobile banking services.

This Acquisition-Hungry Company Just Hit Our Best Stocks to Buy List

Conagra Brands Inc. (NYSE: CAG) is about to announce a takeover of Pinnacle Foods Inc. (NYSE: PF), and it's laying the groundwork for the company's lucrative modernization plan…

In fact, RBC Capital Markets just upgraded the stock in the wake of the news of the acquisition, giving CAG a target price of $46 for a potential gain of 33% from today's share price of $34.64.

Acquisitions are going to be a key driver of CAG's future growth.

Conagra has a clearly defined plan to spend money on acquisitions to diversify its brand, attract health-conscious consumers, increase top-line growth, and help widen its margins.

And the company's acquisition of Pinnacle Foods is a sign Conagra is ambitiously pursuing this plan.

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The deal will make Conagra the second-largest frozen food company in the United States, behind only industry giant Nestle.

And that's just one reason to own CAG stock…

Why Conagra Stock Is One of the Best Stocks to Buy

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SEA (SE) vs. TENCENT HOLDING/ADR (TCEHY) Head to Head Contrast

SEA (NYSE: SE) and TENCENT HOLDING/ADR (OTCMKTS:TCEHY) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Valuation & Earnings

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This table compares SEA and TENCENT HOLDING/ADR’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SEA	$414.19 million	11.74	-$560.48 million	($2.72)	-5.47
TENCENT HOLDING/ADR	$36.39 billion	12.92	$10.58 billion	$0.94	52.63

TENCENT HOLDING/ADR has higher revenue and earnings than SEA. SEA is trading at a lower price-to-earnings ratio than TENCENT HOLDING/ADR, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for SEA and TENCENT HOLDING/ADR, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SEA	0	0	6	0	3.00
TENCENT HOLDING/ADR	0	0	4	0	3.00

SEA presently has a consensus target price of $18.67, indicating a potential upside of 25.53%. TENCENT HOLDING/ADR has a consensus target price of $65.00, indicating a potential upside of 31.39%. Given TENCENT HOLDING/ADR’s higher probable upside, analysts clearly believe TENCENT HOLDING/ADR is more favorable than SEA.

Institutional & Insider Ownership

23.6% of SEA shares are owned by institutional investors. Comparatively, 0.3% of TENCENT HOLDING/ADR shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares SEA and TENCENT HOLDING/ADR’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SEA	N/A	N/A	N/A
TENCENT HOLDING/ADR	30.70%	23.89%	11.67%

Dividends

TENCENT HOLDING/ADR pays an annual dividend of $0.10 per share and has a dividend yield of 0.2%. SEA does not pay a dividend. TENCENT HOLDING/ADR pays out 10.6% of its earnings in the form of a dividend. SEA has raised its dividend for 7 consecutive years.

Summary

TENCENT HOLDING/ADR beats SEA on 10 of the 14 factors compared between the two stocks.

SEA Company Profile

Sea Limited engages in the digital entertainment, e-commerce, and digital financial service businesses in the Greater Southeast Asia. The company operates through three segments: Digital Entertainment, E-commerce and Digital Financial services. It provides Garena digital entertainment platform for users to access mobile and PC online games, and eSports operations; and access to other entertainment content, such as live streaming of online gameplay and social features. The company also operates Shopee e-commerce platform, a third-party marketplace that connects buyers and sellers through the Shopee mobile app and Websites. In addition, it offers digital financial services to individuals and businesses, including e-wallet and payment services through the AirPay mobile app and AirPay counter applications on mobile phones or computers; and payment processing services for Shopee, as well as acts as a payment processing platform for Garena's prepaid cards. The company was formerly known as Garena Interactive Holding Limited and changed its name to Sea Limited in April 2017. Sea Limited was founded in 2009 and is headquartered in Singapore.

TENCENT HOLDING/ADR Company Profile

Tencent Holdings Limited, an investment holding company, provides Internet value-added services (VAS) and online advertising services in Mainland China, Hong Kong, North America, Europe, other Asian countries, and internationally. The company operates through VAS, Online Advertising, and Others segments. It offers online games, community VAS, and applications across various online platforms; online advertising services, such as delivery of pay-for-click, pay-for-download, etc., as well as display based advertising; and payment related, cloud, and other services for individual and corporate users. The company also develops software; develops and operates online games; and provides information technology, asset management, online literature, and online music entertainment services. Tencent Holdings Limited was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.