Top Research Reports for PepsiCo, McDonald's & Zoom Video

Original post
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).
 
The Hottest Tech Mega-Trend of All                 
 
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
 
 
Sheraz Mian
 
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>>>
Featured Reports

Theravance’s (TBPH) Yupelri Aids Growth, High Reliance a Woe

Per the Zacks Analyst, Theravance’s Yupelri has witnessed a strong sales uptake since its launch and is driving growth.

Green Investments to Aid Duke Energy (DUK), Rising Costs Ail

Per the Zacks analyst, solid investments in clean energy will expand Duke Energy’s footprint in the growing renewable market. Yet COVID-19 induced costs are weighing on the stock’s earnings.

TC Energy’s (TRP) C$37B Growth Projects to Boost Earnings

The Zacks analyst believes that TC Energy’s C$37 billion of growth projects should support its earnings and dividend payouts. However, debt of C$37.6 billion is a concern.

Restructuring Supports Valmont (VMI) Amid Weak Demand

Per the Zacks analyst, the company should gain from its restructuring and capacity expansion actions amid headwinds from weak demand in Irrigation and Coatings businesses.

Water-Related Business to Aid A. O. Smith (AOS) Amid Pandemic

Per a Zacks analyst, A. O. Smith (AOS) is poised to benefit from strength in its water treatment and residential water heating businesses, especially in the U.S. in 2020.

Markel (MKL) Banks on Acquisitions Amid Escalating Costs

Per the Zacks Analyst, strategic buyouts have aided the company to expand its reinsurance product offerings and boost its surety capabilities.

Goldman (GS) Exhibits Cost Control; Legal Issues Linger

Per the Zacks analyst, Goldman depicts cost control efforts to drive operational efficiency. Also, business diversification remains a key strength. Yet, legal issues will likely strain profitability.

New Upgrades

Maximize B2B Plan to Aid ODP Corporation (ODP) Cost Structure

Per the Zacks analyst, ODP’s Maximize B2B restructuring plan positions it for growth. The plan aims to maximize cost savings, reduce retail lease liabilities and accelerate growth on the B2B platform.

Skyworks (SWKS) Rides on 5G Product Suite & LTE Solutions

Per Zacks analyst, Skyworks’ growing clout in the connectivity solutions and 5G markets is a positive. Higher demand for LTE solutions along with product rollouts will drive its top-line growth.

IDEXX (IDXX) Continues to Gain From Robust Sales in CAG Arm

The Zacks analyst is upbeat about the robust performance of IDEXX’s CAG business despite the pandemic-led business challenges. Launch of ProCyte One Hematology Analyzer buoys optimism.

New Downgrades

Higher DTC Losses & Debt Hinders Disney’s (DIS) Progress

Per the Zacks analyst, coronavirus-led uncertainty, higher operating losses in Direct-to-Consumer (DTC) business and a debt-ridden balance sheet are expected to impede Disney’s growth.

Escalating Operating Costs Hurt ZTO Express’ (ZTO) Growth

The Zacks analyst is concerned about high operating costs and rising capex, which are exerting pressure on ZTO Express’ bottom line.

Weakening Memory Chip Demand to Hurt Micron (MU)

Per the Zacks Analyst, Micron’s near-term performance might be hurt by the bleak memory chip demand as customers are adjusting inventories in response to the economic recession caused by COVID-19.

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
 
Zoom Video Communications, Inc. (ZM): Free Stock Analysis Report
 
Skyworks Solutions, Inc. (SWKS): Free Stock Analysis Report
 
PepsiCo, Inc. (PEP): Free Stock Analysis Report
 
McDonalds Corporation (MCD): Free Stock Analysis Report
 
The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
 
The Walt Disney Company (DIS): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research