Monday, November 16, 2020
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 PepsiCo, Inc. (PEP), McDonald's Corporation (MCD) and Zoom Video Communications, Inc. (ZM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
PepsiCo shares have outperformed the Zacks Beverages - Soft drinks industry in the year-to-date period (+5.9% vs. -1.4%). The Zacks analyst believes that despite the pandemic related challenges, the company’s robust third quarter results were backed by resilience and strength in the global snacks and foods business, along with gains in the beverage category. The snacks/food business benefited from increased at-home consumption trends, while the beverage business returned to growth in the third quarter. The company also gained from its strong portfolio of brands, a responsive supply chain and flexible go-to-market systems, which helped maintain continued supplies.
However, it witnessed soft margins on incremental COVID-19 related costs. Also, adverse currency rates remain a headwind.
McDonald's shares have underperformed the Zacks Retail - Restaurants industry in the year to date period (+8.0% vs. +8.6%). The Zacks analyst believes that such a discouraging trend however is likely to reverse in the near term, backed by better-than-expected earnings and revenues in third-quarter 2020. The bottom line beat the consensus estimate after missing the same in the trailing two quarters. The bottom line improved 5% year over year, while the top line declined 2% year over year.
McDonald’s increased focus on delivery and accelerated deployment of EOTF restaurants in the United States is commendable. However, dismal comps and high debt is hurting the company. Moreover, it is witnessing dismal traffic due to the coronavirus pandemic.
Shares of Zoom Video have gained +493.1% over the year-to-date period against the Zacks Internet - Software industry’s rise of +77.0%. The Zacks analyst believes that demand for the company’s cloud-native video-first platform is expected to remain solid owing to the work-from-home and online-learning wave. Easy to deploy, use, manage and scalability makes Zoom Video’s software popular among its customers. Expanding clientele is expected to drive top-line growth momentum in the near term. Moreover, the company’s expanding international presence is a key catalyst.
However, acute competition from the likes of Microsoft and Cisco in the video-communication space does not bode well.
Other noteworthy reports we are featuring today include The Walt Disney Company (DIS), The Goldman Sachs Group, Inc. (GS) and Skyworks Solutions, Inc. (SWKS).
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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>>>