Follow The Money To Big Gains In The Second Half
With the second-quarter earnings season quickly approaching the analysts have begun re-evaluating their position on some of America's top brands. Based on what we're seeing, the quarter is shaping up to be another one that is better than the current consensus is predicting. The question for us, really, is how much better than expected it will be. Regardless of the outcome, here is a quick look at three of the top names on the analyst radar this earnings season.
Under Armour Is A Focused Performer
Under Armour (NYSE: UA) has been struggling with its brand for the last few years but those troubles may be behind it. Cowen analyst John Kernan just put the stock on the company's list of best small and mid-cap ideas based on the view momentum can continue into the fiscal year 2022. In the note, Kernan says there is upside potential in the guidance and consensus estimates because the brand has reached a much more consistent message. That, along with improved tools for tracking consumers and reacting to trends, has created a path to growth and capital returns.
Among Under Armour’s most recent moves are an increase in its wages. The company increased its minimum wage for all US employees in an effort to remain competitive in the hiring market. The wage increase comes with a hiring push as the company looks to expand the e-commerce business, a move that we see fueling growth long into the future. The current consensus rating on the stock is a hold, and there have been no other significant analyst activity since the last earnings report. Under Armour is scheduled to report calendar Q2 earnings on August 3rd.
Verizon Is On A Positive-Catalyst Watch List
Analyst Michael Rollins of Citigroup put Verizon (NYSE: VZ) on the firm's positive catalyst watch list. Verizon is scheduled to release earnings on July 21st and Rollins is predicting results above the consensus estimate. He sees EPS coming in at $1.33 versus the $1.28 consensus on strength in postpaid and service revenue. Rollins upgraded his estimate for postpaid phone net additions by nearly double to 215,000 and for service revenue to catch a tailwind from customer up-tiering and the reinstatement of late fees.
Among the trends driving Verizon's business is the switch to 5G. The switch to 5G is slowly but steadily happening and been accelerated recently by the launch of On-Site 5G. On-Site 5G is Verizon's first commercially available private 5G solution intended for institutions and businesses. The networks can be deployed even where public 5G is not available and On-Site LTE customers can easily upgrade to one. Regardless of the outlook for growth, the company pays a very safe and growing 4.5% yield.
McDonald's Is A Tasty Buy
Wells Fargo analyst John Tower says the consensus Wall Street estimates from McDonald's (NYSE: MCD) do not factor in the recent surge in foot traffic. Vaccinations and reopening efforts, especially in international markets, have created a catalyst for this company. The current consensus is calling for $5.55 billion in revenue for the quarter or up 47% from last year's pandemically-impaired quarter and up 3.9% from 2 years ago.
Looking forward, McDonald's growth will be supported by a new world new program. The loyalty program will launch on July 8th after a successful test it will allow customers to interact in order to collect coins and receive perks. Customers will get 1500 points just for signing up and 100 points for every dollar spent, the 1500 points are enough for a free sandwich. Based on the results of similar programs at Chipotle Mexican Grill, Starbucks, and Panera, we expect the program to support low single-digit to mid-single-digit growth.
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