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Q4 Earnings Update and Analyst Reports for Apple, JNJ & McDonald's

Friday, January 14, 2022

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the Q4 earnings season, in addidtion to new research reports on 16 major stocks, including Apple Inc. (AAPL), Johnson & Johnson (JNJ), and McDonald's Corporation (MCD). 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 >>>

Q4 Earnings Season Scorecard

The big banks kicked off the Q4 reporting cycle for the Finance sector, with the market underwhelmed with the JPMorgan (JPM) and Citigroup (C) results, but appreciating Wells Fargo's (WFC) improving financials.

JPMorgan's Q4 earnings aren't bad, but the stock had a pretty good run ahead of these results and it would have been very difficult for the quarterly report to build on that momentum.

In other words, the reaction of bank stocks to the quarterly numbers should be seen more in a sell-the-news type of framework than anything fundamentally wrong with the results.

Including this morning's bank results, we now have Q4 results from 26 S&P 500 members or 5.2% of the index's total membership. Total Q4 earnings for these 26 index members are up +19.2% from the same period last year on +11.7% higher revenues, with 88.5% beating EPS estimates and 84.6% beating revenue estimates.

It is still very early in the Q4 reporting cycle, but it is a higher beats percentage for these 26 index members relative to what we saw in the preceding reporting cycle.

The reporting cycle ramps in a major way next week, with mroe than 90 companies on the docket to come out with Q4 results, including 37 S&P 500 members. Finance companies dominate this week's reporting docket, with Netflix (NFLX) and Schlumberger (SLB) as the notable bellwethers from other sectors reporting results. 

Today's Featured Analyst Reports

Shares of Apple have outperformed the S&P 500 over the past year (+36.3% vs. +26.1%), with the stock benefiting from robust momentum in the iPhone, iPad, Mac, Wearables as well as an expanding App Store ecosystem.

Apple’s Services and Wearables businesses are expected to drive top-line growth in fiscal 2022 and beyond. Momentum in the Services business, strong adoption of Apple Pay and growing Apple Music subscriber base are other catalysts for growth. Supply chain constraints due to industry-wide silicon shortages, COVID-related manufacturing disruptions as well as supply chain constrains remain as the major headwinds, though.

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

Johnson & Johnson shares have gained +5.3% over the past three months against the Zacks Large Cap Pharmaceuticals industry’s gain of +9.2%. The Zacks analyst believes that J&J’s Pharma unit has been performing at above-market levels on the back of successful label expansion of blockbuster drugs, Imbruvica, Darzalex and Stelara.

Sales in the pharmaceutical segment rose 11.3% in the first nine months of 2021 on an organic basis despite the coronavirus pandemic. J&J has a positive record of earnings surprises in the recent quarters. It has also been making rapid progress with its pipeline and line extensions with several pivotal data readouts expected this year. Generic competition, pricing pressure continue and several litigations, however, remain as the major concerns.

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

Shares of McDonald's have gained +11.6% in the last six months against the Zacks Restaurants industry’s loss of -6.1%. The Zacks analyst believes that McDonald's efforts to strengthen its position through various sales initiatives along with increased focus on franchising bode well.

Robust drive-thru presence, as well as investments in delivery and digitization over the past few years have helped it counter the pandemic. By mid-2022, MCD expects to have a loyalty program in the top six markets. It has been making every effort to drive growth in international markets. Pandemic-related woes persist, softening economy and spike in COVID cases, however, have weighed on MCD’s margins lately.

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

Other noteworthy reports we are featuring today include Intuit Inc. (INTU), The Boeing Company (BA) and U.S. Bancorp (USB).

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>>>

Today's Must Read

Robust Portfolio, Services Strength to Benefit Apple (AAPL)

J&J's (JNJ) Sales Benefit From Strength Across Segments

Robust Comps to Aid McDonald's (MCD), Traffic Woes Stay

Featured Reports

Intuit (INTU) Rides on Product Refresh, Higher Subscriptions
Per the Zacks analyst, Intuit is benefiting from frequent product refreshes, which help it to gain customers.

Order Growth Aid Boeing (BA), 787 Program Quality Issue Woes
Per the Zacks analyst, solid order flow and deliveries for its products bolster Boeing's revenue growth prospects.

Acquisitions to Aid U.S. Bancorp (USB) Amid Mounting Costs
Per the Zacks analyst, inorganic growth strategies will enhance U.S. Bancorp's balance sheet and market share.

CSX Benefits From Improved Freight Demand Amid Cost Woes
With improved freight demand, higher volumes are driving CSX's top line. However, the Zacks analyst is concerned about the company's rising operating expenses.

Strategic Initiatives Benefit Aon (AON), Rising Debts Hurt
Per the Zacks analyst, buyouts and collaborations have enhanced the company's capabilities, which in turn, has led to bottom-line growth.

Cost Control Measures to Aid BNY Mellon's (BK) Bottom Line
Per the Zacks analyst, BNY Mellon's global reach, its robust assets under management, and its initiatives to improve efficiency through cost control measures are expected to support profits.

Ross Stores (ROST) Q3 Sales Mirror Improved Demand Trends
Per the Zacks analyst, Ross Stores' Q3 sales reflect ongoing strength in consumer demand. Sales gained from growth across some merchandise categories and regions, and robust comparable store sales.

New Upgrades

Strength in Pet Unit to Bolster Spectrum Brands' (SPB) Growth
Per the Zacks analyst, Spectrum Brands' Global Pet Care business has been benefiting from acquisitions and strong demand across categories and channels.

Prime Automotive Buyout to Fuel Group 1's (GPI) Prospects
Group 1's acquisition of Prime Automotive has made the Zacks analyst bullish on the stock, as the deal is expected to add $1.8 billion in annualized revenues for the auto retailer.

Bandwidth (BAND) Likely to Ride on Enhanced 911 Capabilities
Per the Zacks analyst, Bandwidth is poised to benefit from its enhanced 911 capabilities, while an evolving portfolio and accretive customer base act as key growth catalysts across diverse markets.

New Downgrades

Increasing Investments Amid Stiff Competition Hurts SAP
Per the Zacks analyst, SAP's increasing investments to enhance cloud-based offerings will limit margin expansion. Further, stiff competition in most of the markets is a major concern.

Pay-TV Subscriber Loss Hurts DISH Network's (DISH) Prospects
Per the Zacks analyst, DISH Network continues to lose subscribers in both Pay-TV and Sling TV businesses. Further, a debt-ridden balance sheet is a lingering concern.

Soaring Commodity Costs & Debt Pile to Hurt Adient (ADNT)
Adient expects high raw material prices to mar its margins by $125 million in fiscal 2022. The Zacks analyst is also concerned about the firm's elevated leverage of 67%.

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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
The Boeing Company (BA): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
Johnson & Johnson (JNJ): Free Stock Analysis Report
McDonald's Corporation (MCD): Free Stock Analysis Report
U.S. Bancorp (USB): Free Stock Analysis Report
Intuit Inc. (INTU): Free Stock Analysis Report
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