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Chicago, IL – July 11, 2024 – Today’s Zacks Investment Ideas article features Nvidia NVDA, McDonald’s MCD and Discover Financial Services DFS.

3 important reports to keep an eye on this earnings season

The Q2 reporting season is just around the corner and the big banks are getting their results rolling again starting this Friday. Overall results remained stable through the reporting period and the technology sector is also expected to deliver another strong result.

Of course, there are some worthwhile reports that investors should keep on their radar, a list that includes popular NVIDIA, MC Donalds And Discover financial services.

With Nvidia, we get more color in AI trading, while MCD and DFS can give us deeper insights into the current consumer situation.

Let’s take a closer look at how they are currently performing in terms of their respective releases.

Nvidia's results confirm optimistic development in AI

Nvidia's strong performance over the past year was driven by continued demand for chips used in AI applications. The stock continues to hold a favorable Zacks Rank #1 (Buy) thanks to a remarkably optimistic outlook across all timeframes.

Investors will be keen to see the company's data center results, which include revenue from its AI chips. The company has consistently beaten our consensus estimates on this metric, with the most recent beat coming in at a notable $1.8 billion.

All four recent overbids were above $1.4 billion, reflecting strong demand for the company.

As for the headline numbers, consensus estimates for revenue and earnings have been rising in recent months. Huge growth is expected, with current estimates calling for earnings to rise 130% on a 110% increase in revenue.

Nvidia's revenue growth has been remarkable, with the company posting triple-digit year-over-year increases in each of the last four quarters.

Discover Financial Services enjoys credit growth

DFS shares have roughly tracked the broader market in 2024, gaining about 18% compared to an 18.5% gain for the S&P 500. Shares enjoyed positive sentiment following the recent earnings release despite missing EPS expectations, with positive segment results enough to keep investors happy.

Analysts are optimistic about the quarter to be reported, with the consensus estimate of $2.99 ​​per share up 8% since April. Revenue expectations have followed a similar trend, rising 2% to $4.2 billion over the same period.

Although the company's net charge-off ratio increased to 4.9% last quarter, the CEO noted that delinquencies stabilized. Loan growth was significantly positive during the same period, increasing 12% to $126.6 billion.

McDonald's is under consumer pressure

MCD shares have shown significant weakness year to date, losing about 16% in value and significantly underperforming. The shares failed to maintain their positive performance following quarterly results as consumers appeared to be fed up with high prices.

Earnings expectations declined after the latest release but have remained stable since then. The Zacks Consensus EPS estimate of $3.10 suggests a 2% decline from the year-ago period. Revenue expectations also declined, with the expected $6.7 billion coming in below the $6.8 billion estimate at the end of April.

CEO Chris Kempcinski noted recent consumer stubbornness but remained positive, stating, “As consumers become more discerning with every dollar they spend, we will continue to earn their visits by providing leading, reliable, everyday value and excellent execution in our restaurants. Looking ahead to the remainder of 2024 and beyond, we remain focused on leveraging competitive advantages under our Accelerating the Arches plan and increasing QSR market share to drive long-term growth.”

Nevertheless, the higher prices have significantly increased the company's margins.

Bottom line

The Q2 reporting season has officially already begun, but with the results from the major banks this Friday, this period will really get into full swing.

The earnings situation has remained largely stable and strong growth is again expected in the technology sector.

Notable new releases that investors should keep an eye on include Nvidia, McDonald's and Discover Financial Services.

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Past performance is no guarantee of future results. Any investment involves the risk of loss. This material is for informational purposes only and does not constitute investment, legal, accounting or tax advice or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. No assumption should be made that investments in any security, company, sector or market identified and described have been or will be profitable. All information is current as of the date of publication and is subject to change without notice. The 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 in securities. These returns are from hypothetical portfolios consisting of Zacks Rank = 1 stocks that are rebalanced monthly with no transaction costs. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Information on the performance figures shown in this press release can be found here.

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