Today's Must Read
McDonald's (MCD) Banks on Sales Initiatives Amid High Costs
Production Boost from Startups, Cost Savings Aid TOTAL (TOT)
Tuesday, November 5, 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 Communications Inc. (VZ), McDonald's (MCD) and TOTAL (TOT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Verizon’s shares have outperformed the Zacks Wireless National industry year to date (19.1% vs. 6.5%). The Zacks analyst believes that Verizon has embarked on a new operating structure with Verizon 2.0 that aims to align the business model with evolving customer needs.
Focus on online content delivery, mobile video and online advertising will likely drive future growth. Verizon aims to cut costs through employee reduction and divestments as it ramps up investment in its next-generation 5G network, which is expected to be the next growth driver. The company has also upped the ante against rivals by launching 5G Ultra Wideband network in select locations of the country.
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 contracts margins.
Shares of McDonald's have lost 5.1% in the past six months against the Zacks Restaurants industry’s decline of 2.1%. The Zacks analyst believes that the company’s increased focus on delivery and accelerated deployment of EOTF restaurants in the United States is an added positive. These apart, efforts to drive growth in international markets are encouraging.
In second-quarter 2019, the company posted mixed results, wherein earnings missed the estimate but revenues beat the same. Notably, its various sales and digital initiatives as well as positive comps bode well. Furthermore, global comps at McDonald’s have been positive over the trailing 16 quarters.
However, high labor costs and currency headwinds woes linger. Additionally, revenues have been under pressure for quite some time. Even its heightened focus on refranchising might cut the capital requirements and facilitate EPS growth.
TOTAL’s shares have gained 10.4% over the past three months against the Zacks International Integrated Oil industry’s rise of 3.1%. The Zacks analyst believes that Ongoing fluctuation in the commodity prices is hurting the company despite growth in production volumes.
TOTAL's operations in some politically-troubled regions and increasing competition might impact the company’s profitability. Due to its global presence, it is exposed to risks associated with pursuing business abroad. However, TOTAL continues to benefit from strong contribution from new startups and expanding upstream portfolio that has above industry-average exposure to the faster-growing hydrocarbon producing regions of the world.
Cost reduction initiatives will boost the margins of the company. Strategic acquisitions and divestment of assets that are not in sync with its long-term objectives are going to boost performance of the company.
Other noteworthy reports we are featuring today include Amgen (AMGN), Broadcom (AVGO) and UPS (UPS).
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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>>>