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Q1 Earnings Scorecard and Analyst Reports for Mastercard, Netflix & Coca-Cola

Tuesday, April 16, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the Q1 earnings season and new research reports on 16 major stocks, including Mastercard Incorporated (MA), Netflix, Inc. (NFLX) and The Coca-Cola Company (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 Scorecard

Including all of the reports that came out this morning, we now have Q1 results from 40 S&P 500 members. Total Q1 earnings for these 40 index members are up +10.7% from the same period last year on +4.5% higher revenues, with 82.5% beating EPS estimates and 65% beating revenue estimates.

This is better earnings growth for these 40 index members relative to what we have seen from this group in recent quarters, though the revenue growth pace represents a modest deceleration from other recent periods.

The 82.5% EPS beats percentage for this group of 40 index members compares to 92.5% in 2024 Q4, 87.5% in 2023Q3, 85% in 2023 Q2, 82.5% in 2023 Q1, and a 12-quarter average of 80.4%.

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The 65% revenue beats percentage is modestly above the 62.5% beats percentage we saw for this group of 40 index members in the preceding period, but is otherwise tracking below other recent periods as well as the 12-quarter average of 70.9%. In other words, we can say that companies appear to be struggling to beat consensus Q1 estimates.

Looking at Q1 as a whole, combining the actual resutls from these 40 index members with estimates for the still-to-come companies, total earnings are now expected to be up +3.8% from the same period last year on +3.9% higher revenues. For more details our earnings commentary, please check out our weekly Earnings Trends report here >>>2024 Q4 Earnings Season Gets Underway

Today's Featured Research Reports

Mastercard shares have outperformed the Zacks Financial Transaction Services industry over the past year (+24.7% vs. +17.4%). Numerous acquisitions are helping the company to grow addressable markets and drive new revenue streams. The COVID-19 crisis accelerated the adoption of digital and contactless solutions, providing an opportunity for the firm's business to expedite its shift to the digital mode.

Mastercard is well-poised to gain from steady cash-generating abilities. A strong capital position allows it to pursue acquisitions and prudently deploy capital through share buybacks and dividend payments. Mastercard also increased its quarterly dividend to 66 cents per share.

However, steep operating expenses might stress its margins. Also, we expect general and administrative costs to jump almost 11% in 2024. High rebates and incentives may weigh on net revenues. As such, the stock warrants a cautious stance.

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

Shares of Netflix have outperformed the Zacks Broadcast Radio and Television industry over the year-to-date period (+26.4% vs. +8.4%). The company is benefiting from its growing subscriber base, thanks to a robust portfolio. Crackdown on password-sharing and the introduction of paid sharing in more than 100 countries, which represents over 80% of Netflix’s revenue base, is also expected to aid growth. We expect all of these favorable developments reconfirmed following the company's Q1 results after the market's cose on April 18th.

Netflix’s diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content, has been driving its growth prospects.

However, stiff competition in the streaming space from the likes of Apple, Amazon Prime Video, Disney+, Peacock and Paramount+ is a headwind. Netflix’s leveraged balance sheet and a higher streaming obligation are concerns. Additionally, unfavorable forex is expected to hurt operating income in the first quarter of 2024.

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

Coca-Cola shares have outperformed the Zacks Beverages - Soft drinks industry over the past six months (+9.5% vs. +8.2%). The company continues to witness positive business trends as reflected by its robust surprise history. KO’s sales and earnings beat estimates for the fourth consecutive quarter in fourth-quarter 2023.

Earnings and sales also improved year over year. Strong revenue growth across most of its operating segments aided by improved price/mix and increased concentrate sales boosted the results. It is poised to gain from innovations and accelerating digital investments. It provided an upbeat guidance for 2024.

However, shares of Coca-Cola lagged the industry in the past three months. KO witnesses inflationary cost pressures, related to higher commodity and material costs, as well as higher marketing investments.

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

Other noteworthy reports we are featuring today include Berkshire Hathaway Inc. (BRK.B), Medtronic plc (MDT) and CSX Corporation (CSX).

Director of Research

Sheraz Mian

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

Strong Cross-Border Volumes Aid Mastercard (MA), High Costs Hurt

Robust Content Aids Netflix (NFLX) Amid Stiff Competition

Product Innovation Reflect Coca-Cola's (KO) Core Strength

Featured Reports

Solid Insurance Business Aid Berkshire (BRK.B), Cat Loss Ail
Per the Zacks analyst, Berkshire is posed to grow on solid insurance business that drive earnings and generates maximum return on equity. However, exposure to cat loss induces earnings volatility.

Medtronic (MDT) Gains in Market Share, Global Growth Robust
The Zacks analyst is impressed that despite macro-economic issues, Medtronic is reporting market share gains across core businesses. Non-U.S. developed and emerging markets expansions remain strong.

CSX's Dividend Payouts Boost Prospects Amid Cost Concerns
The Zacks analyst is impressed with CSX's efforts to reward its shareholders. However, high operating expenses, mainly due to elevated labor costs, are hurting its bottom line.

Diversified Revenues to aid Moody's (MCO) Amid Rising Costs
Per the Zacks analyst, strategic acquisitions, revenue diversification and strong balance sheet are likely to support Moody's top line growth. However, rising costs and high competition are headwinds.

International Demand Aids L3Harris (LHX) Amid Labor Shortage
Per the Zacks analyst, L3Harris enjoys a rising demand from its international market, with 24% growth in international orders during fourth-quarter 2023. Yet, shortage of skilled labor poses a threat.

Pembina (PBA) to Benefit from Integrated Business Model
The Zacks analyst believes that Pembina Pipeline's integrated business model makes it less exposed to the volatile commodity market but is worried about the midstream firm's high debt burden.

Dr. Reddy's (RDY) Global Generics Business to Boost Sales
Per the Zacks analyst, Dr. Reddy's enjoys a strong foothold in the generics market with new product launches and pending filings. Its strategic initiatives are expected to mitigate challenges.

New Upgrades

Asset Intelligence Segment Aids Zebra Technologies (ZBRA)
Per the Zacks analyst, Zebra Technologies' Asset Intelligence and Tracking segment is benefiting from strong sales of radio frequency identification products and pricing actions.

High Gold Price, Streaming Agreements Aid Royal Gold (RGLD)
Per the Zacks analyst, Royal Gold will gain from high gold prices, acquisitions and efforts to lower debt. Its solid streaming agreements will also drive growth.

Solid International Footprint Aid JAKKS Pacific (JAKK)
Per the Zacks analyst, JAKKS Pacific's solid international footprint, strategic acquisitions, focus on innovation and collaborations with popular brands and movie franchisees bode well.

New Downgrades

Cambium (CMBM) Plagued by Soft Demand in Enterprise Business
Per the Zacks analyst, sluggish demand in the Enterprise segment owing to elevated inventory levels will likely hinder Cambium's top line. Macroeconomic headwinds remain a concern.

Weakness in Software licenses & Stiff Competition Ail SAP
Per the Zacks Analyst, SAP's performance is affected by weak uptake of software licenses and support offerings. Also, stiff competition and increasing costs are concerns.

Dismal Margin to Hurt PENN Entertainment (PENN) Prospects
Per the Zacks analyst, PENN Entertainment's operations are likely to be hurt by dismal adjusted EBITDAR margin and financial challenges. Also, stiff competition and weather woes are added concerns.

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

Mastercard Incorporated (MA) : Free Stock Analysis Report

CocaCola Company (The) (KO) : Free Stock Analysis Report

CSX Corporation (CSX) : Free Stock Analysis Report

Netflix, Inc. (NFLX) : Free Stock Analysis Report

Medtronic PLC (MDT) : Free Stock Analysis Report

Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report

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Zacks Investment Research