Thursday, November 9, 2023

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 McDonald's Corporation (MCD), ConocoPhillips (COP) and RTX Corporation (RTX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

McDonald's shares have struggled this year, lagging the broader marekt (+1.4% vs. +15.2% for the S&P 500 index) and the Zacks Restaurants industry (+1.4% vs. +2.9%) on the back of lingering worries about the expected economic slowdown on the fast-food giant's business.

These worries notwithstanding, MacDonald's continues to outperform in operatging results, as was more than clear from the company's better-than-expected results on October 30th. The company’s top and the bottom line increased on a year-over-year basis. Robust comparable sales, menu price increase and positive guest counts backed the upside. Also, its emphasis on digital initiatives, campaigns and loyalty programs bodes well.

During the quarter, digital sales came in at $9 billion, contributing 40% to the company’s system-wide sales. Given the rise in digital adoption, the company remains optimistic and anticipates the initiatives to drive sales and average checks in the upcoming periods.

Earnings estimates for 2023 have increased in the past 30 days, depicting analysts’ optimism. However, inflationary pressures and stiff competition are primary headwinds.

(You can read the full research report on McDonald’s here >>>)

Shares of ConocoPhillips have outperformed the Zacks Oil and Gas - Integrated - United States industry over the past six months (+16.3% vs. +12.9%). The company has secured a solid production outlook, thanks to its decades of drilling inventories across its low-cost and diversified upstream asset base.

The resource base represents the company’s strong footprint in prolific acres in the United States, comprising Eagle Ford shale, Permian Basin and Bakken shale. Also, the company is better positioned to rely on its strong balance sheet to withstand any adverse business scenario.

However, due to the inflationary market, the company’s overall operating and production expenses continue to increase, hurting the bottom line. ConocoPhillips’ exploration and production activities are exposed to extreme volatility in oil and gas prices, making the overall business scenario of the upstream energy player extremely choppy.

(You can read the full research report on ConocoPhillips here >>>)

Shares of RTX have underperformed the Zacks Aerospace - Defense industry over the past year (-12.9% vs. -11.2%). The Zacks analyst believes that appreciating U.S. dollar has been burdening airlines, which may hurt the stock. Also, removals and inspections of engines from A32neo might increase costs for RTX.

It may also be affected if China enforces its announced sanctions against RTX’s missile and defense unit. Nevertheless, its wide range of combat-proven defense products, RTX continues to receive ample orders from the Pentagon and its foreign allies, which, in turn, bolsters its backlog count.

A steady recovery in commercial air traffic is boosting commercial OEM as well as commercial aftermarket sales for RTX. The stock holds a solid solvency position.

(You can read the full research report on RTX here >>>)

Other noteworthy reports we are featuring today include Merck & Co., Inc. (MRK), Moody's Corporation (MCO) and Emerson Electric Co. (EMR).

Director of Research

Sheraz Mian

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>>>