Monday, September 12, 2022
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 McDonald's Corporation (MCD), Automatic Data Processing, Inc. (ADP) and Prologis, Inc. (PLD). 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 >>>
McDonald's shares have outperformed the Zacks Retail - Restaurants industry over the past year (+7.8% vs. -13.8%) and the broader market (-10.3%). Driving this outperformance is the company’s size and track record of operational excellence allows it thrive in good times and bad. The Zacks analyst sees McDonald's increased focus on menu innovation, loyalty program expansion and efforts to drive growth in international markets as helping it sustain the performance momentum.
Robust digitalization will help the company in driving long-term growth and capturing market share. However, restaurant closures in Russia and Ukraine coupled with inflationary pressures on labor and commodities remain headwinds.
The company stated that recovery in China remains challenging due to ongoing COVID resurgences and related lockdowns. It has reported mixed second-quarter 2022 with the top line fell year over year, while the bottom line increased on a year-over-year basis
(You can read the full research report on McDonald’s here >>>)
Automatic Data Processing’s shares have outperformed the Zacks Outsourcing industry over the past year (+24.8% vs. +15.1%). The company continues to enjoy a dominant position in the human capital management market through strategic buyouts like Celergo, WorkMarket, Global Cash Card and The Marcus Buckingham Company.
It has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. Further, it continues to innovate, improve operations and invest in its ongoing transformation efforts.
On the flip side, ADP faces significant competition in each of its product lines. Failure to remain technologically updated might reduce the demand for its solutions and services. Rising expenses due to investment in transformation efforts remains a concern. High debt remains a concern.
(You can read the full research report on Automatic Data Processing here >>>)
Prologis shares have declined -0.3% over the past year against the Zacks REIT and Equity Trust - Other industry’s decline of -6.9%. The company’s the rising supply of industrial real estate in several markets might fuel competition. Also, hikes in interest rates might affect its ability to purchase or develop real estate.
However, given Prologis’ capacity to offer high-quality facilities in key markets, it is well-poised to capitalize on the favorable industrial real estate industry trends. Along with the fast adoption of e-commerce, this asset category is set to gain from a likely rise in inventory levels.
Hence, with a healthy operating platform, strategic buyouts and solid balance-sheet strength Prologis is expected to prosper. Prologis’ acquisition of Duke Realty, which is anticipated to materialize in fourth-quarter 2022, will add to the company’s strength and size and drive long-term growth.
(You can read the full research report on Prologis here >>>)
Other noteworthy reports we are featuring today include HSBC Holdings plc (HSBC), Sony Group Corporation (SONY), and Applied Materials, Inc. (AMAT).
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>>>
Today's Must Read
Loyalty Program Aid McDonald's (MCD), China Comps Woes Stay
Strong Business Model Boosts ADP, Low Current Ratio Hurts
E-commerce Adoption, High Inventory to Aid Prologis (PLD)
Higher Music & Pictures Sales Benefit SONY Amid Rising Costs
Per the Zacks analyst, Sony is gaining from strong performance of its Music and Pictures' segments. Rising global costs and semiconductor shortages are concerns.
Applied Materials (AMAT) Rides on Foundry & Logic Spending
Per the Zacks analyst, solid customer spending in foundry and logic which are required in IoT, communications, 5G, automotive, power and sensor applications is benefiting Applied Materials.
Battery Management System Solutions Aid Analog Devices (ADI)
Per the Zacks analyst, Analog Devices is benefiting from a strong momentum in the electric vehicle space on the back of its robust Battery Management System solutions.
Canadian Pacific (CP) Rides on Freight Revenues, Costs Ail
The Zacks analyst is impressed with the fact that freight revenues are improving. However, rising operating expenses are likely to keep the bottom line under pressure.
Permian Basin Focus, Low-cost operation Aid Occidental (OXY)
Per the Zacks analyst Occidental's acquisition of Anadarko expanded its operation in resource rich Permian Basin and low cost operation will boost its profits over the long run.
Phillips 66 (PSX) to Gain From Higher Distillate Fuel Demand
Per the Zacks analyst, Phillips 66 is well-positioned to benefit from rising distillate fuel demand amid changes in marine fuel sulfur limits.
Quest Diagnostics' (DGX) Base Business Grows Amid Low Sales
The Zacks analyst is optimistic about Quest Diagnostics' robust base business results across hematology, prenatal genetics and pharma services. Yet, lowered sales performance is discouraging.
Expansion Efforts, Restructuring to Aid HSBC Holdings (HSBC)
Per the Zacks analyst, HSBC Holdings' plan to expand in Asia will strengthen its performance and increase market share. Its initiatives to improve efficiency through restructuring will aid profits.
Solid Top Line, Strong Cash Flows Aid Unum Group (UNM)
Per the Zacks analyst, its strong revenues driven by higher overall persistency, disciplined sales trends have led to significant growth. Moreover, healthy balance sheet should drive long-term growth.
MGIC Investment (MTG) is Set to Grow on New Insurance Written
Per the Zacks analyst, MGIC Investment is set to grow on new insurance written aided by the increase in the mortgage origination market and higher refinance activity.
High Raw Material Prices, Chip Crisis Bog Down Gentex (GNTX)
Per the Zacks analyst, raw material and commodity price inflation dampen Gentex's margins and are likely to continue in the near-term. The chip crisis-led supply chain issues also play spoilsports.
Increased SG&A Expenses Hurt Medifast's (MED) Performance
Per the Zacks analyst, escalated SG&A expenses is hurting Medifast for a while. In the second quarter of 2022, adjusted SG&A expenses came in at $263.3 million, up $31 million year over year.
Inflationary Pressures Hurt Brinker's (EAT) Prospects
Per the Zacks analyst, Brinker's operations are likely to be affected by commodity inflation and a tight labor market. Also, pandemic induced supply chain disruptions remains a concern.
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Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
Prologis, Inc. (PLD) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
HSBC Holdings plc (HSBC) : Free Stock Analysis Report
Sony Corporation (SONY) : Free Stock Analysis Report
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