Monday, November 4, 2024

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 The Home Depot, Inc. (HD), McDonald's Corp. (MCD) and Comcast Corp. (CMCSA), as well as a micro-cap stock Tile Shop Holdings, Inc. (TTSH). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

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 >>>

Shares of Home Depot have gained +15.1% over the year-to-date period against the Zacks Building Products - Retail industry’s gain of +16.7%. The company gains from its “One Home Depot” plan focused on expanding supply chain facilities, technology and improving the digital experience.

The interconnected retail strategy and strong technology infrastructure have consistently boosted web traffic in recent quarters. HD is also advancing investments to build a Pro ecosystem. HD’s sales saw modest recovery in second-quarter fiscal 2024 driven by contributions from the recent SRS acquisition.

However, Home Depot’s stock has lagged the industry in the past three months due to higher interest rates and macroeconomic uncertainty, dampening consumer demand for home improvement. While Home Depot exceeded sales and EPS estimates in the fiscal second-quarter, EPS declined year over year. Inflationary pressures, including lumber prices, continue to hurt financial performance.

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

McDonald's shares have outperformed the Zacks Retail - Restaurants industry over the past six months (+12.2% vs. +8.5%). The company reported third-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis. The company is benefiting from technological enhancements, unit expansion and a loyalty program.

McDonald’s is focusing on menu innovation, as it believes that the strengthening of the core menu and solid marketing are likely to pave the way for additional growth in the upcoming periods. Also, the emphasis on the Accelerating the Arches strategy bodes well.

Earnings estimates for 2024 have increased in the past 30 days, depicting analysts’ optimism regarding the stock growth potential. However, dismal comps, macroeconomic challenges and elevated commodity and wage costs are headwinds.

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

Shares of Comcast have outperformed the Zacks Cable Television industry over the year-to-date period (+2.0% vs. -0.5%). The company is benefiting from continued momentum in domestic wireless subscribers and Peacock, offset by a declining broadband subscriber base. The company’s plan to transition to DOCSIS 4.0 is noteworthy.

The technology will expand it much faster and at a lower cost compared with its competitors. Decreasing programming and production costs bode well for Comcast’s profitability. Its streaming service, Peacock, is a key catalyst in driving broadband sales. Strong free cash flow generation ability is noteworthy.

However, the company persistently suffers from video-subscriber attrition due to cord-cutting. Moreover, broadband prospects are suffering from increased competition from fixed wireless and fiber businesses. Additionally, a leveraged balance sheet is a major concern for the company.

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

Tile Shop’s shares have gained +32.2% over the past year against the Zacks Building Products - Retail industry’s gain of +37.3%. This microcap company with market capitalization of $304.07 million have seen strong liquidity, with $25.3 million in cash and no debt, along with a $75 million credit line, provides financial stability.

E-commerce growth of more than 25% underscores successful digital investments, while the Superior private label brand bolstered professional customer engagement and enhanced market penetration.

However, a 6.9% decline in comparable store sales, rising selling, general and administrative (SG&A) expenses, and a 75.9% decline in net income to $1.2 million raise concerns about sustained profitability. Persistent margin erosion and declining cash flow may pressure the stock amid a tough retail environment.

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

Other noteworthy reports we are featuring today include FirstEnergy Corp. (FE), Huntington Bancshares Inc. (HBAN) and EMCOR Group, Inc. (EME).

Mark Vickery
Senior Editor

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>>>

Today's Must Read

Home Depot's (HD) Interconnected Strategy to Boost Sales

McDonald's (MCD) Banks on Strategic Initiatives, Costs High

Domestic Wireless Subscriber Gain Benefits Comcast (CMCSA)

Featured Reports

Growing Regulated Base, Investments Aid FirstEnergy (FE)
Per the Zacks analyst, FirstEnergy's investment of $26 billion through 2028, will strengthen its existing operations. The Energize365 program will boost its regulated transmission capabilities.

Loan & Deposit Growth Aid Huntington (HBAN), High Costs Ail
Per the Zacks analyst, Huntington's top line benefits from a steady increase in loans and deposit balances. However, an elevated expense base is a concern.

Solid Strategic Execution Aids Labcorp (LH), Cost Woes Stay
Per the Zacks analyst, Labcorp gains strategically by being a top partner with health systems and using data and technology to bring key services and capabilities. Yet, rising costs may dent growth.

Paylocity Holding (PCTY) Benefits From Growing Customer Base
Per the Zacks Analyst, Paylocity Holding is benefiting from its differentiated employee strategy, comprehensive product offerings and on-demand pay facility, that are helping it win new customers.

Encompass Health (EHC) Rides on Strong Volumes Amid High Costs
Per the Zacks Analyst, Encompass Health's top line has been fueled by growing patient volumes and inorganic growth initiatives. However, high expenses continue to weigh on margins.

Robust Sales in the Americas, APMEA Aid Watts Water (WTS)
Per the Zacks analyst, Watts Water gained from rising sales across the Americas and APMEA region amid the soft European market. Acquisition costs and inflation dampen its operating margins.

Corcept (CORT) Rides on Robust Korlym Sales Performance
Per the Zacks analyst, Corcept's sole drug, Korlym, approved for treating Cushing's syndrome, is driving the top-line. The company is also making good progress with its promising pipeline candidates.

New Upgrades

Robust Construction Activity & Acquisitions Aid EMCOR (EME)
Per the Zacks analyst, EMCOR benefits from innovation and high-demand projects, particularly in data centers, semiconductor plants, and institutional sectors. Also, focus on acquisitions bode well.

Pilgrim's Pride (PPC) Gains on Robust Foodservice Demand
Per the Zacks analyst, Pilgrim's Pride is benefiting from growth in foodservice business. It saw higher volume and revenues in commercial and non-commercial foodservice distribution subchannels in Q3.

SkyWest (SKYW) Benefits From Improving Air-Travel Demand
The Zacks Analyst is impressed with the fact that increased air-travel demand is helping SkyWest carry more passengers and witness more revenues.

New Downgrades

Cyclical headwinds, Unfavorable Forex Hurts Arrow Electronics (ARW)
Per the Zacks Analyst, cyclical headwinds and unfavorable foreign currency exchange rates are expected to hurt ARW's top-line growth in the near term.

Rising Inventories & High Debt to Ail CNH Industrial (CNH)
Per the Zacks analyst, increasing industry channel inventories and expected lower demand are likely to hit CNH Industrial's 2024 sales. The rising debt level is also concerning.

Cyclical headwinds, Unfavorable Forex Hurts Arrow Electronics (ARW)
Per the Zacks Analyst, cyclical headwinds and unfavorable foreign currency exchange rates are expected to hurt ARW's top-line growth in the near term.

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

FirstEnergy Corporation (FE) : Free Stock Analysis Report

Comcast Corporation (CMCSA) : Free Stock Analysis Report

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

Huntington Bancshares Incorporated (HBAN) : Free Stock Analysis Report

The Home Depot, Inc. (HD) : Free Stock Analysis Report

EMCOR Group, Inc. (EME) : Free Stock Analysis Report

Tile Shop Hldgs, Inc. (TTSH) : Free Stock Analysis Report

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