Trefis Top 5 – May 23 Insights (SPWRA, S, GM, MCD, RSH)

In today’s wrap up we highlight the prospects for SunPower’s (NASDAQ:SPWRA) commercial and residential components business. We also take a look at Sprint’s (NYSE:S) plans to navigate the consolidation in the US telecom market. GM (NYSE:GM) posted results recently and highlighted its plans to improve profit margins and refocus its N. America business. McDonald’s (NYSE:MCD) sees food prices increasing by 4-4.5% in the US and Europe and said it will take a hit on gross margins to keep its growth intact. Finally, we launch coverage on RadioShack (NYSE:RSH) with a price estimate of $18.30 and we look at the contribution of mobile electronics that contributes around 50% of its stock value.

SunPower Could Triple Commercial & Residential Components Sale by 2015

SunPower (NASDAQ:SPWRA) boasts of being able to manufacture the most efficient large-scale solar modules in the solar power industry. Starting off as a producer of solar power products for installation on residential and commercial units, SunPower has been able to foray into large-scale utility power projects with its acquisition of PowerLight Corporation. But we believe that the residential & commercial components business will continue to be the biggest source of value for the company – almost 43% of the $16.22 price estimate we maintain for SunPower’s stock. And this is because of the exponential growth expected in the company’s shipments of components for residential & commercial use. SunPower’s primary competitors include First Solar (NASDAQ:FSLR), SuntechPower (NYSE:STP), and Yingli Green Energy Holding Com (NYSE:YGE).

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Sprint Looks to Shake Up the Big Guys

In March, we wrote an article examining the impact of AT&T (NYSE:T) and T-Mobile’s merger on Sprint (NYSE:S). We noted that, apart from pushing for 4G, Sprint could do well to distinguish its services through new and powerful marketing campaigns. It looks like that company has now done just that. Below we discuss what Sprint is doing and the potential impact on its stock value. Apart from AT&T and T-Mobile, the other big competitor for Sprint is Verizon (NYSE:VZ).

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Pedal to the Metal for GM’s Stock if Margins Kick Into Higher Gear

GM (NYSE:GM) reported solid 2011 Q1 net income a few weeks back. While the company’s revenues increased 15% year-on-year, its adjusted-EBIT ^[1] improved almost 18%. We believe that continued improvement in GM’s operating profits can add significant upside to its stock value. The company competes with other global automakers like Ford (NYSE:F), Daimler AG (NYSE:DAI), Honda (NYSE:HMC), Toyota (NYSE:TM), Hyundai (SEO:005380) and Nissan (PINK:NSANY).

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Higher Food Costs Will Pressure Profit Margins at McDonald’s

McDonald’s (NYSE:MCD) expects food costs to rise between 4 and 4.5 percent in the United States and Europe this year, a situation that would put pressure on the company’s profit margins. McDonald’s is the market leader in the fast food market with about 19% share. It competes with Wendy’s (NYSE:WEN), Subway, Burger King, and Yum! Brands (NYSE:YUM). In the specialty coffee market, it competes with Starbucks (NASDAQ:SBUX).

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Coverage Launch on RadioShack – $18.30 Trefis Price Estimate

RadioShack (NYSE:RSH) sells consumer electronics goods and services through its RadioShack chain of stores and competes with retailers like Wal-Mart (NYSE:WMT), Target (NYSE:TGT) and Best Buy (NYSE:BBY). The seven broad categories of products it sells are: wireless, accessory, modern home, personal electronics, power, technical, service and others. Of these, wireless is a major segment for RadioShack and contributes approximately 48% to its net revenues. The key to RadioShack’s growth is whether it can maintain revenue growth by optimizing its product mix based on consumer trends.

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1. Earnings before interest and taxes, excluding special items such as one time gains and charges. [↩]