Quantcast

McDonald's, TravelCenters of America and Alphabet highlighted as Zacks Bull and Bear of the Day


Shutterstock photo

For Immediate Release

Chicago, IL - Feb 1, 2018 - Zacks Equity Research highlights McDonald's Corp.  MCD as the Bull of the Day, TravelCenters of America TA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on  Alphabet Inc. GOOGL .

Here is a synopsis of all three stocks:

Bull of the Day :

Iconic fast food chain  McDonald's Corp. has been a staple in the restaurant industry soon after its founding in 1955. By concentrating on a limited menu-burgers, fries, and beverages-and focusing on quality and effectiveness, the company managed to sell its 100 millionth hamburger just three years later in 1958.

From there, The Golden Arches expanded to 119 countries around the world. The menu, however, has gotten much more complex, and varies depending on location and region. Plus, we can all agree that the McDonald's breakfast menu, and its decision to make that an all-day option, was one of their all-time best business decisions, ever (#BlessTheMcGriddle).

The company is in the middle of a significant turnaround effort, and the Zacks #1 (Strong Buy) stock has experienced a strong rally since 2015. As its valuation has risen, investors and analysts have come to expect certain results from McDonald's, which is why its most recent quarter came as a little bit of a shock.

Mixed Fourth Quarter Results

For any other restaurant company, these results would have been stellar. But for McDonald's, they were not reflective of the company's previous performance.

Adjusted earnings of $1.71 were strong, surpassing the Zacks Consensus and improving 19% year-over-year.

Sales, though, was where MCD struggled, and saw a decline due to its overall strategic refranchising initiative. Revenues at company-operated restaurants fell 26.8%, though revenues at franchise-operated restaurants increased 12.2%.

Global comps grew 5.5%, while U.S. comparable sales and international lead markets increased 4.5% and 6%, respectively.

Shares of McDonald's experienced their biggest intraday drop after the report was released, and even though it matched Street estimates for U.S. comps, analysts have become so used to seeing the company exceed in this category that this slowdown was certainly a surprise.

Rising Estimates

Earnings growth estimates have been steadily increasing, however, and analysts are still quite bullish on MCD.

For its current quarter, earnings are expected to grow almost 9%, and five analysts revised their estimates upwards in the last 30 days compared to none lower.

Fiscal 2018 figures are also looking quite promising, with eight estimates moving higher in the past month. The consensus estimate trend has seen a boost for this time frame, increasing from $6.97 per share to $7.26 per share.

Earnings estimates for 2019 are on the rise as well, jumping from $7.48 per share to $7.81 per share in the last 30 days.

Can the Rally Continue?

Despite its fourth-quarter hiccup, we have to remember that MCD stock has been on a very strong run these past couple of years, growing nearly 40% over the past one year and gaining almost 80% in the past five years.

Bear of the Day :

If you've ever taken a road trip in the U.S., there's a good chance that you've come across a  TravelCenters of America travel center. The company is a full-center national travel center chain, with nationwide locations that serve hundreds of thousands of professional drivers, including virtually all major trucking fleets, and other highway travelers each month.

The company operates under the TravelCenters of America, TA, and Petro brand names, and offer diesel and gasoline fueling services, restaurants, heavy truck repair facilities, stores, and other services.

Third Quarter 2017 Results

Last quarter was not one of TravelCenters' best.

The Zacks Rank #5 (Strong Sell) stock posted earnings of 8 cents per share that came in well below the Zacks Consensus of 22 cents per share, representing a negative surprise of 63.6%.

Total revenues of $1.58 billion also missed the Zacks Consensus of $1.62 billion.

In its Travel Centers segment, though, both of TA's fuel and nonfuel revenues increased, which resulted in an increase in total revenues of $101.5 million, or 8.2%.

For its Convenience Store segment, fuel revenues increased by $10.4 million thanks to increases in market prices for fuel, but nonfuel revenues decreased mostly due tp a result of the mix of products and services sold.

At the time of this report's release, TA was involved in a litigation case with financial solutions company Comdata, and fees and expenses involving this matter impacted its Q3 results.

TA tentatively reports Q4 results on Feb. 27.

Mixed Outlook

Earnings growth estimates have kind of been all over the place for TA.

For its current quarter, just one analyst has revised their estimate upwards in the last 30 days. The Zacks Consensus Trend has also moved higher, from $-0.07 to $-0.05, in the past 30 days.

TA's current year estimate trend has moved marginally higher, from $0.70 to $0.71, but compared to the prior year period, earnings are expected to surge over 1,500%.

However, looking at next fiscal year, one analyst cut their estimate downwards in the last 30 days, and the estimate trend has gone from flat to a loss of a penny per share for the period. Earnings are expected to decline over 100% for this fiscal year.

Will Shares Be Able to Rebound?

Shares of TravelCenters are down almost 40% within the past one year.

Additional content:

3 Key Estimates for Google's Q4 Earnings

Shares of Google parent Alphabet Inc. opened nearly 0.5% higher on Wednesday as investors gear up for the company's fourth-quarter earnings announcement tomorrow afternoon. Google is often considered a bellwether for the entire technology sector, so investors will definitely want to pay close attention to this upcoming report.

A shift to mobile computing once threatened Google's traditional search business, management has successfully adapted to changing consumer trends by expanding its operations into nearly every corner of the modern tech world.

Today, Google and the other subsidiaries under the Alphabet umbrella sit on the cusp of dominance in several booming industries, including cloud computing, mobile payments, ecommerce, and artificial intelligence. Of course, search is still the company's bread and butter, but there's plenty more to be excited about if you're an Alphabet investor right now.

Heading into Alphabet's report date, our current consensus estimates are calling for the company to post adjusted earnings of $10.12 per share and revenues of $25.67 billion. These results would represent year-over-year growth of 8% and 30%, respectively.

Key Report Items

But of course, earnings and revenue are just two of the many things investors will be looking at when Alphabet reports on Thursday. In fact, it is possible that the company's post-earnings momentum is inspired by its performance in key business segments.

To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.

Based on our current consensus estimates, we expect Google's advertising revenues to come in at $26.935 billion for the quarter, which would represent growth of about 20.3% from the year-ago period. Last quarter, advertising revenues grew about 21.4% to touch $24.065 billion.

But Alphabet's most exciting growth catalyst is its "Google other revenues" category. This unit includes revenues from the company's Google Play Store, as well as its Google Cloud offerings and hardware initiatives.

Our consensus estimate file is calling for Google other revenues to hit $4.613 billion, up about 35.6% from the year-ago quarter. In the previous quarter, Google other revenues expanded more than 39.9% to reach $3.405 billion. If Alphabet can post a positive surprise in this category, it will likely be because of strong holiday sales from things like Google Home and the Pixel.

Finally, investors should also expect to see impressive growth in Alphabet's mysterious "Other Bets" unit. The company uses this segment to lump together its smaller projects, and for the most part, these projects don't generate much revenue.

But some of the Other Bets subsidiaries-including Google Fiber, Nest, and Verily-are adding to Alphabet's top line. According to our consensus estimates, Other Bets revenues are expected to come in at $362 million, which would represent growth of 38.2% year-over-year. Last quarter, Other Bets revenues soared 53.3% to touch $302 million.

Make sure to check back here for our full analysis of Alphabet's actual results tomorrow!

Want more analysis from this author? Make sure to follow @ Ryan_McQueeney  on Twitter!

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 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.

See Zacks' 3 Best Stocks to Play This Trend >>

Get today's Zacks #1 Stock of the Day with your free subscription to Profit from the Pros newsletter:

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

Follow us on Twitter:  https://twitter.com/zacksresearch

Join us on Facebook:  https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.


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

Alphabet Inc. (GOOGL): Free Stock Analysis Report

TravelCenters of America LLC (TA): Free Stock Analysis Report

McDonald's Corporation (MCD): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
Referenced Symbols: GOOGL , TA , MCD


More from Zacks.com

Subscribe






Zacks.com
Contributor:

Zacks.com

Equity Research








Research Brokers before you trade

Want to trade FX?