Today's Must Read
Solid Balance Sheet, Revenue Rise Aid American Express (AXP)
Unit Growth to Aid Starbucks (SBUX), Coronavirus Woes Stay
Tuesday, February 18, 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 Apple (AAPL), American Express (AXP) and Starbucks (SBUX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple’s shares have outperformed the S&P 500 over the past year (+90.1% vs. +20.7%), with the momentum expected to continue despite the China challenges resulting from the virus outbreak. The Zacks analyst believes that iPhone sales benefited from trade-in programs, which doubled on a year-over-year basis. Wearables’ top-line growth was aided by strong demand for Apple Watch and AirPod.
Apple’s first-quarter fiscal 2020 results reflected continued momentum in the Services segment and a rebound in iPhone sales, which grew on a year-over-year basis. Wearables’ top-line growth was aided by strong demand for Apple Watch and AirPod. AirPod sales benefited from the launch of AirPod Pro, which features active noise cancellation.
Moreover, Apple Watch’s adoption rate grew rapidly. However, the company doesn’t expect to achieve second-quarter revenue guidance due to COVID-19, which is expected to hurt iPhone supply and demand in China.
Shares of American Express have gained +9.3% in the past six months against the Zacks Financial Miscellaneous Services industry's rise of +7.2%. The Zacks analyst believes that the company’s expanding presence in the business-to-business market and investment in technology should drive long-term growth.
Its revenue growth is driven by a strong brand, continued efforts toward building business in new growth verticals, shift toward digital and a strong economy, which are driving consumer spending. Its strong capital position and disciplined capital management are impressive.
However, the company's reward expenses have been increasing over the past many quarters, which weigh on margins. Cost of card member services has been increasing over the years, indicating higher engagement level across its premium travel services.
Starbucks' shares have gained +6.7% over the past three months against the Zacks Food & Restaurants industry's rise of +9%. The Zacks analyst believes that Starbucks' business is rapidly growing in China, courtesy of innovative store designs and the success of the MSR program.
The company reported first-quarter 2020 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. However, the top and the bottom-line increased year over year owing to robust performance of Americas and international segments, store openings, enhanced customer experience, and digitalization.
The company believes that China and the Asia-Pacific region will drive business growth over the next five years. Notably, more than half of the company’s stores in China have been impacted by the coronavirus outbreak.
Other noteworthy reports we are featuring today include CVS Health (CVS), Goldman Sachs (GS) and BCE Inc. (BCE).
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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>>>