Today's Must Read
McDonald's (MCD) Robust Comps Growth to Drive Performance
Stiff Competition, F-35 Program Costs Hurt Lockheed (LMT)
Monday, July 1, 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 Verizon (VZ), McDonald’s (MCD) and Lockheed Martin (LMT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Verizon’s shares have gained +13.3% in the past year, outperforming the Zacks Wireless National industry’s increase of +8.7% during the same period. The Zacks analyst thinks that Verizon is well positioned to benefit from the impending 5G boom, driven by healthy traction in the wireless business.
The telecom giant is seeking first mover advantage in the 5G race with the launch of commercial 5G smartphones, in collaboration with Samsung. Focus on online content delivery, mobile video and online advertising will likely drive future growth. Furthermore, the company has upped the ante against its rivals by launching 5G Ultra Wideband network in Chicago, Minneapolis, and in select locations of Denver and Providence.
However, it continues to struggle in a competitive U.S. wireless market. The company's wireline division is struggling with losses in access lines due to competitive pressure from VoIP service providers. Verizon is spending heavily on promotion and lucrative discounts to woo customers, which weighs on its margins.
Shares of McDonald’s have gained +10.2% in the past three months, outperforming the Zacks Restaurants industry, which has increased +8.7% over the same period. The Zacks analyst thinks that its various sales and digital initiatives as well as positive comparable sales bode well.
Furthermore, global comps at McDonald’s have been positive over the trailing 15 quarters. The company’s 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 markets are encouraging. However, high labor costs and currency headwinds remain concerns.
Additionally, revenues have been under pressure for quite some time due to strategic refranchising initiatives. Even its heightened focus on refranchising might reduce capital requirements and facilitate EPS growth. McDonald’s margins have been under pressure.
Lockheed Martin’s shares have gained +21.5% in the past year, outperforming the Zacks Aerospace Defense industry which has gained +8.4% over the same period. The Zacks analyst thinks that Lockheed Martin, being the largest defense contractor in the world, enjoys strong demand for its high-end military equipment in domestic and international markets.
As a result, solid order growth has been a key catalyst for the company. F-35 continues to be a major revenue contributor. Of late, the company is witnessing increased demand for its THAAD missiles from the Kingdom of Saudi Arabia.
However, the company’s higher debt-to-equity ratio shows that the stock is highly leveraged when compared to its industry, and thus bears higher chance of insolvency. Lockheed Martin also faces intense global competition for its broad portfolio of products and services. Higher cost expenditure related to the F-35 program may also hurt growth trajectory.
Other noteworthy reports we are featuring today include 3M (MMM), Capital One (COF) and Dollar Tree (DLTR).
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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>>>