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Top Stock Reports for McDonald's, 3M & Stryker

Wednesday July 26 2017

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), 3M (MMM) and Stryker (SYK). 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 >>>

Buy rated McDonald’s’ shares have gained +28.9% over the last six months easily outperforming many of its peers which have been struggling to survive the restaurant space’s tough operating environment lately. McDonald’s Q2 earnings and revenues exceeded expectations, but revenues fell year over year mainly due to the impact of refranchising.

Meanwhile, the company recorded the eighth consecutive quarter of global comps growth. In fact, McDonald’s grew sales and guest counts in each of its top nine markets, for the first time since 2008. The Zacks analyst likes McDonald’s attempts to reinforce its position worldwide via various sales and digital initiatives.

Also, increased focus on refranchising is expected to reduce its capital requirements, thereby facilitating EPS growth and ROE expansion in the long run. Yet, higher costs along with currency headwinds may hurt profits while a soft industry backdrop in the U.S. and macroeconomic concerns in some parts of the world might limit sales growth.

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

3M’s shares are up +12.4% in the year-to-date period, outperforming the S&P 500 index (up +10.8%) and the Zacks Conglomerates sector (down -1.4%). Driven by broad-based organic growth across all segments, 3M reported strong second-quarter results with healthy year-over-year increase in earnings and revenues, although it missed expectations on both counts.

The company has raised its earlier guidance for 2017 on strong quarterly results and improved business outlook. The Zacks analyst likes 3M's global footprint, diversified product portfolio and ability to penetrate different markets. However, increased pension expenses remain a significant headwind for 3M and erode its profitability.

Sustained strength in the U.S. dollar will further continue to negatively impact earnings, as exports consume a significant part of the company’s operations and growth prospects. Given its international presence, adverse foreign currency translations are also likely to affect 3M’s ability to realize projected growth rates in its sales and earnings.

(You can read the full research report on 3M here >>>).

Stryker’s shares have gained +18.5% over the last six months, outperforming the Zacks Medical Products industry, which has gained +17.8% over the same period. The Zacks analyst thinks Stryker's performance is likely to be affected by supply-side headwinds. The company has been grappling with issues in its spine business for long and this is expected to affect performance in the second quarter.

China might prove to be a challenging market for the company. Additionally, challenging global economic conditions and rising competition raise concerns. Estimate movement has also been mixed ahead of its second quarter earnings release. However growing adoption of MAKO will drive sales in the orthopedic and reconstructive surgery market. The acquisitions of Sage Products and Physio Control and the tie-up with Indo UK Institute of Health's Medicity Program are also major positives.

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

Other noteworthy reports we are featuring today include Goldman Sachs (GS), Colgate-Palmolive (CL) and Kinder Morgan (KMI).

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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) Remains Sturdy on Traffic Boosting Efforts

Organic Growth Drives 3M (MMM) Q2, Currency Woes Remain

Supply Issues in Spine Business Overshadows Stryker (SYK)

Featured Reports

Legal Costs & Low Trading Income Linger for Goldman (GS)

As per the Zacks analyst, legal issues leading to higher expenses remain a concern for Goldman. Further, challenging environment depicting lower trading income add to the woes.

Noble (NBL) to gain from Clayton Williams Energy Acquisition

The Zacks analyst believes Noble Energy is well poised to gain from its strategic acquisitions and improving returns from its global asset base.

Kinder Morgan (KMI) to Grow on Fee-Based Deals, Debts High

Kinder Morgan expects to generate majority of its cash flow from stable fee-based contracts in 2017. However, high dependence on debt financing could hurt the company, per the covering analyst.

Quest (DGX) Gains on Strategic Buyouts, Perky Long-term View

Per the Zacks analyst, Quest Diagnostics is gaining on new tie-ups with hospitals and integrated delivery networks. Also promising long term growth outlook based on two-point strategy buoys optimism.

Cadence (CDNS) Guides Up '17, Strength in Hardware to Help

Cadence expects hardware business to improve in the second-half of 2017. The Zacks analyst believes that the strong adoption of S1 FPGA product will drive this growth.

Strong Merchant Solutions Unit Aids Total System (TSS)

Per the Zacks analyst, the company's merchant acquiring services remains strong given growth in direct businesses and higher sales productivity.

Diversified Product Base Aids Everest Re (RE), Cat Loss Woes

Per the Zacks analyst Everest Re is well poised for growth banking on its global presence, product diversification and traditional risk management capabilities.

New Upgrades

Centene's (CNC) Cash Position & Rising Revenue Aid Margin

Per the Zacks analyst, Centene's Health Net acquisition boosted revenue growth and consequently drove the margin. Its operational efficiency that resulted in solid cash flow generation, impresses.

Branch Consolidation Aids Regions Financial (RF) Cost Savings

Per the Zacks analyst, Regions Financial's efforts to reduce expenses through consolidation of 100-150 branches are impressive. Such move is expected to improve its financials in the near-term.

V.F. Corp. (VFC) to Gain from Solid Direct-to-Consumer Sales

Per the Zacks analyst, V.F. Corp. should continue gaining from its direct-to-consumer business that grew 14% in the second quarter. Management also raised its DTC sales view, reflecting its prospects.

New Downgrades

Higher G&A Expenses a Drag on Skechers' (SKX) Bottom Line

The Zacks analyst remain apprehensive about Skechers' bottom line performance that has been declining since the past five straight quarters due to rise in selling and general & administrative expenses

Worsening Asset Quality, Higher Costs Hurt CIT Group (CIT)

Per the Zacks analyst, deteriorating asset quality largely due to higher provisions remains a key concern for CIT Group. Also, persistent rise in personnel expenses is likely to hurt its financials.

Colgate's (CL) Softened Organic Sales Trends Raise Concern

The Zacks analysts are apprehensive about Colgate's weak organic sales trends in first-half 2017 due to softness in North America and challenges in Asia-Pacific. It cut organic sales view for 2017.


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
 
Stryker Corporation (SYK) : Free Stock Analysis Report
 
3M Company (MMM) : Free Stock Analysis Report
 
McDonald's Corporation (MCD) : Free Stock Analysis Report
 
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
 
Goldman Sachs Group, Inc. (The) (GS) : Free Stock Analysis Report
 
Colgate-Palmolive Company (CL) : Free Stock Analysis Report
 
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