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Top Research Reports for McDonald's, Enterprise Products & Charles Schwab

Mark Vickery
McDonald's (MCD) earnings in the first quarter of 2019 are likely to bear the brunt of declining sales and high expenses associated with operations.

Thursday, April 11, 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 McDonald’s (MCD), Enterprise Products Partners (EPD) and Charles Schwab (SCHW). 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 gained +17.1% in the past year, underperforming the Zacks Restaurants industry which has gained +19.4% over the same period. The Zacks analyst thinks high labor costs and currency headwinds remain major concerns.

Moreover, revenues have been under pressure for quite some time due to strategic refranchising initiatives. Even its heightened focus on refranchising might cut the capital requirements and facilitate EPS growth. McDonald’s margins have been under pressure from worldwide wage increases.

However, McDonald’s impressive earnings surprise history, various sales and digital initiatives, as well as positive comparable sales, bode well. In fact, global comps at McDonald’s have been positive over the trailing 14 quarters.

Furthermore, increased focus on delivery and accelerated deployment of Experience of the Future restaurants in the United States should boost its performance. These apart, efforts to drive growth in International Lead & High Growth Markets bode well.

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

Shares of Buy-ranked Enterprise Products have gained +6.9% over the past three months, outperforming the Zacks Oil Production Pipeline MLP industry's increase of +5.4%. The Zacks analyst likes Enterprise Products’ extensive network of pipelines that is spread across nearly 50,000 miles.

Importantly, the pipeline network, which is connected to every major U.S. shale play, provides services to producers and users of commodities by transporting gas, liquids, and refined products. At present, Enterprise’s $5.1-billion pipeline of fee-oriented midstream projects positions it to enjoy above-average growth in distributable cash flow over the next two years, in turn expanding its distribution coverage ratio.

Most importantly, its ethane export facilities in the Gulf Coast, which link domestic producers to the overseas market, should drive further growth as the use of ethane is rapidly increasing to manufacture plastic instead of naphtha. As such, the partnership holds tremendous upside potential.

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

Schwab shares have outperformed the Zacks Investment Brokers industry over the past year, declining -14.5% vs. -19.4%. The Zacks analyst likes Schwab’s impressive earnings surprise history, having surpassed expectations in each of the trailing four quarters. Estimates have been stable lately ahead of the company's first quarter 2019 earnings release.

The company remains well positioned to gain from the higher interest rates and its initiatives to strengthen trading income. Also, the company’s efforts to improve operating efficiency will go a long way to support profitability. Its efficient capital deployment activities reflect a strong balance sheet position.

However, continuously rising operating expenses are likely to hurt bottom-line growth to an extent. Moreover, the company’s significant dependence on fee-based revenues remains a major concern as it might hamper financials.

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

Other noteworthy reports we are featuring today include Novartis (NVS), BB&T Corp (BBT) and Humana (HUM).

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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

McDonald's (MCD) Gains From Re-Franchising, High Costs Hurt

Enterprise's (EPD) Gulf Coast Ethane Units to Drive Growth

Focus on Trading Revenues Aids Schwab (SCHW), Costs a Woe

Featured Reports

Acquisitions, Loan Growth Aid BB&T (BBT), High Costs a Woe

Per the Zacks analyst, deal to acquire SunTrust, higher rates, increase in loan demand and focus on fee income will support BB&T. Yet elevated expenses will likely hamper bottom line to an extent.

Restructuring Aids PPG Industries (PPG) Amid Input Cost Woes

Per the Zacks analyst, cost savings from restructuring actions should support PPG Industries' margins amid headwinds from raw material cost inflation.

Rising Data-Center Demand Aids Digital Realty's (DLR) Growth

Per the Zacks analyst, pick up in demand for data centers will stoke Digital Realty's growth. Accretive acquisitions, development efforts and decent balance-sheet strength offer scope to excel.

Strong Portfolio, Growing Clientele Aid Palo Alto (PANW)

Per the Zacks analyst, Palo Alto is benefiting from product launches and increasing adoption of its security platforms. Also, customer wins and expansion of existing customer base are tailwinds.

Industrial Spending Drives Rockwell (ROK), Higher Costs Ail

Per the Zacks analyst, higher industrial capital spending, investment in new products and acquisitions will likely drive growth despite higher material costs.

Improving Premiums Aid Markel (MKL), High Expenses Ail

Per the Zacks analyst, Markel is set to grow on solid results at Insurance and Reinsurance segments, niche focus and insurance risk management.

Cost Saving Efforts to Boost Campbell Soup's (CPB) Profits

Per the Zacks analyst, Campbell Soup has been gaining from persistent focus on cost saving efforts.

New Upgrades

Improving Loans & Margins to Support Ally Financial (ALLY)

Per the Zacks analyst, strong balance sheet, improving revenues and net interest margin along with rising loan balances will support Ally Financial's profitability in the quarters ahead.

Rite Aid's (RAD) Reverse Stock Split to Boost Sentiment

Per the Zacks analyst, Rite Aid is looking to maintain NYSE listing compliance with the 1-for-20 reverse stock split approved by the board. This should also help regain investors' confidence.

Voya Financial (VOYA) Set to Grow on Solid Segmental Results

Per the Zacks analyst, Voya Financial is poised to grow its earnings over the long term given its focus on high-growth, high-return, capital-light businesses position and reducing costs.

New Downgrades

Weak Sandoz, Pipeline Setbacks Weigh on Novartis (NVS)

Per the Zacks analyst, pricing pressure continues to weigh on Novartis' generic division, Sandoz. Pipeline setbacks and generic competition have also adversely impact the company's performance.

Escalating Operating Expenses Continue to Hurt Humana (HUM)

Per the Zacks analyst, the company's operating expenses, which have been increasing over the past several years, continues to weigh on margins.

Rising Commodity Costs Hurt Stanley Black & Decker (SWK)

Per the Zacks analyst, Stanley Black & Decker's steady revenue growth and operational efficiencies are being dampened by a steep rise in commodity costs, which is hurting the company's bottom line.

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The Charles Schwab Corporation (SCHW) : Free Stock Analysis Report
Novartis AG (NVS) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Humana Inc. (HUM) : Free Stock Analysis Report
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
BB&T Corporation (BBT) : Free Stock Analysis Report
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