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Top Analyst Reports for Caterpillar, Walmart & McDonald's

Mark Vickery

Friday, August 2, 2019

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 Caterpillar (CAT), Walmart (WMT) and McDonald's (MCD). 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 >>>

Caterpillar’s shares have underperformed the Zacks Construction and Mining industry (-3.2% vs. -3.1%) over the past six months. Caterpillar’s second-quarter 2019 adjusted earnings per share declined year over year despite higher revenues. In fact, both earnings and revenues missed the respective Zacks Consensus Estimate.

The company anticipates earnings per share at the lower end of its guidance of $12.06-$13.06 for 2019. With regard to the Construction Industries segment, North America will primarily aid growth while China will act as a hindrance. Improving commodity prices will support capital expenditure in the mining sector, which in turn will drive the Resource Industries segment.

Investments in expanded offerings and services, and digital initiatives like e-commerce will also fuel growth. Its cost reduction efforts will help sustain margins despite material cost inflation. However, the recent downward trend in monthly retail sales remains a concern.

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

Shares of Walmart have outperformed the Zacks Supermarkets industry in the year to date period, gaining +17.4% vs +13.8%. The Zacks analyst thinks Walmart’s focus on strengthening e-commerce and store operations has aided the company retain sturdy comps trend in first-quarter fiscal 2019, wherein earnings marked its fifth straight beat.

Further, U.S. comps rose for the 19th straight time. Further, e-commerce sales surged on robust Walmart.com and online grocery performances. Encouragingly, e-commerce sales are expected to rise nearly 35% in fiscal 2020.

The company is also making efforts to improve its International unit by shifting focus to profitable countries. However, the addition of Flipkart was a drag on Walmart’s operating income.

Moreover, transportation costs, compelling pricing strategy and tariff-related worries are threats to margins. Nonetheless, the Flipkart deal bodes well for the long term.

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

McDonald's’ shares have gained 7% in the last three months, underperforming the Zacks Restaurants industry, which has gained 8.9% over the same period. The Zacks analyst believes McDonald's various sales and digital initiatives as well as positive comparable sales bode well for the company. Furthermore, global comps at McDonald’s have been positive over the trailing 16 quarters.

The company’s increased focus on delivery and accelerated deployment of EOTF restaurants in the United States is an added positive. These apart, efforts to drive growth in international markets are encouraging. However, high labor costs and currency headwinds remain concerns.

Additionally, revenues have been under pressure for quite some time. Even its heightened focus on refranchising might cut the capital requirements and facilitate EPS growth.

(You can read the full research report on McDonald's here >>>).

Other noteworthy reports we are featuring today include Pfizer (PFE), Dominion Energy (D) and Marsh & McLennan Companies (MMC).

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Mark Vickery
Senior Editor

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

Weak China Market & Higher Costs to Hurt Caterpillar (CAT)

E-commerce Sales to Fuel Walmart (WMT), Soft Margins a Woe

McDonald's (MCD) Robust Comps Growth to Drive Performance

Featured Reports

Organic Growth, Extensive Global Presence Aid Eaton (ETN)

The Zacks analyst believes Eaton's presence in nearly 175 countries across globe and improvement in end market condition resulting in organic growth across segments.

Dominion (D) Gains from Investment, Share Dilution a Concern

Per the Zacks analyst Dominion's plans to invest $26B to strengthen its infrastructure in the next five years will boost performance but share dilution could adversely impact its earnings.

Cheniere Energy's (LNG) Gas Export Dominance Bodes Well

The Zacks analyst likes Cheniere's competitive advantage of being the first and dominant natural gas exporter in the U.S. market.

Unit Revenue Growth Aids Southwest (LUV) Amid Cost Woes

The Zacks analyst is impressed by the carrier's unit revenue growth. However, increase in non-fuel unit costs due to the Boeing 737 MAX groundings is worrisome.

Strength in Core Game Franchises Drives Electronic Arts (EA)

Per the Zacks analyst, solid demand for core gaming franchises including FIFA, The Sims 4 and Apex Legends is driving Electronic Arts growth prospects amid stiff competition.

Growing Revenues Aid, High Costs Hurt Marsh & McLennan (MMC)

Per the Zacks analyst, its improving bottom line on the back of segmental results and strategic initiatives have helped the company grow.

Core CVI Segment Aids Cooper (COO), Genomics Business Soft

Cooper has been consistently gaining from strength in its core CVI segment. The Zacks Analyst is however apprehensive about the company's soft genomics business.

New Upgrades

Strong Orders & Backlogs Boost Revenues for Meritor (MTOR)

Per the Zacks analyst, Meritor has updated fiscal 2019 outlook on the back of strong orders, high backlogs of trucks and improving U.S. trailer market. This is likely to boost its revenue.

Supply Chain Strategy, Demand Aids Heico Corporation (HEI)

Per the Zacks analyst, focus on executing supply chain strategy continues to be a vital growth driver for Heico Corporation.

ONETractor Strategy to Aid Tractor Supply's (TSCO) Results

Per the Zacks analyst, Tractor Supply's investments in ONETractor initiative, aimed at integrating physical and digital operations, bode well. This is likely to drive the company's top and bottom line

New Downgrades

Several Headwinds to Hurt Pfizer's (PFE) Sales in Second Half

The Zacks analyst says that Pfizer's sales in second half may be hurt by business development activity, incremental currency headwinds and potentially lower sales of key drugs Prevnar and Xeljanz.

Soft Cloud & Service Provider Verticals Ail Juniper (JNPR)

Per the Zacks analyst, softer-than-expected business in the cloud and service provider verticals along with decline in average selling price of products will likely hinder Juniper's top-line growth.

LendingTree (TREE) Faces Rising Costs & Low Mortgage Revenues

Per the Zacks analyst, investments in product development costs and advertising expenses are likely to weigh on LendingTree's expense base. Also, lower mortgage revenues remain a concern.

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Walmart Inc. (WMT) : Free Stock Analysis Report
Pfizer Inc. (PFE) : Free Stock Analysis Report
Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Dominion Energy Inc. (D) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
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