CMG and DIS start the second half of the season
We’re halfway behind us. Around 50% of S&P 500 companies have posted gains so far, and the results have been mixed. According to FactSet, only 69.7% exceeded expectations. That hit rate is below a three-year average hit rate of 79%, according to data from The Earnings Scout. There were some big positive surprises, including Microsoft and Meta Platforms. However, Apple and Google parent Alphabet both posted quarterly misses. This week begins the second half of the earnings season with 87 S&P 500 companies reporting. These include Disney and Chipotle Mexican Grill. Here’s a breakdown of what to expect from those two reports, along with other key names. Chipotle Mexican Grill will report results Tuesday after the bell, followed by a conference call at 4:30 p.m. ET. Most recent quarter: CMG delivered better-than-expected results as higher ticket prices offset weaker customer attendance. This quarter: Analysts polled by Refinitiv expect earnings per share to rise nearly 60%. They also forecast double-digit sales growth. What CNBC restaurant reporter Amelia Lucas observes: “In recent quarters, the biggest question for Chipotle has been how strong the burrito chain’s pricing power is. CEO Brian Niccol said the company didn’t see any significant resistance to higher prices, but its traffic fell in the third quarter. Will the trend reverse – or worsen? The chain recently announced that it plans to increase its workforce by hiring 15,000 restaurant-level employees, a sign that demand may remain resilient despite inflationary pressures.” As history shows, data from Bespoke Investment Group shows that Chipotle beats profit expectations 76% of the time, gaining an average of 1.7% on the win day. The company has also posted better-than-expected earnings for seven consecutive quarters, according to FactSet. On Wednesday, CVS Health will announce results ahead of the opening, with management scheduled to host a conference call at 8 a.m. ET. Most Recent Quarter: CVS raised its outlook and reported quarterly revenue that beat expectations. This quarter: The company’s revenue is likely to be little changed from the year-ago period, while earnings are likely to have declined slightly, according to Refinitiv. What CNBC is watching: CVS said in early January that it expects Medicare Advantage enrollments to grow in the mid-single digits in 2023. This is “disappointing as it falls short of market growth in the high single digits,” Mizuho analyst Ann Hynes said in a note last month. Updates on this front could lead to positive or negative swings for the stock. As History Shows: CVS’s earnings per share have beaten analysts’ expectations for 27 straight quarters, FactSet data shows. Yum Brands will announce results before the bell, followed by a conference call at 8:15 a.m. ET. Most recent quarter: YUM reported weaker-than-expected earnings as a strong US dollar offset increases in sales at KFC and Taco Bell. This quarter: Analysts expect earnings to jump more than 20%, data from Refinitiv shows, but revenue is expected to grow only modestly. What CNBC restaurants reporter Amelia Lucas observes: “The restaurant company, which owns KFC, Taco Bell and Pizza Hut, is expected to report strong US sales, but focus on its international performance will be better than expected. Investors will also be alert for news on how China, KFC’s largest market, is rebounding after the government eased its zero-Covid policy.” What the story shows: Tailored data shows Yum Brands’ earnings estimates 82% lower of cases surpasses. However, according to FactSet, the fast-food company has had four consecutive quarterly misses. Uber Technologies will report results before the bell, followed by a call at 8 a.m. ET. Most recent quarter: UBER reported a drop in revenue and issued strong guidance, sending the stock up 11%. This quarter: According to Refinitiv, the ride-sharing giant is expected to post more than 40% year-over-year revenue growth. What CNBC is watching: While Uber’s revenue is expected to have grown strongly, investors will be looking for clues as to how much progress the company has made toward profitability. “We estimate that Bookings experience a CAGR of 20% from 22-24 and a 3%/4% increase from 23/24 to 23/24, with the underlying assumption that UBER is simply increasing the existing rideshare/restaurant delivery market share holds. We also expect continued progress toward over $5 billion in EBITDA in 24, which should boost confidence in long-term viability,” Jefferies analyst John Colantuoni wrote in a Jan. 29 note. As history shows, Uber delivers average gain of 1.12% on earnings day, according to Bespoke, although it beats estimates only 47% of the time. However, the stock has fallen after two of its last three earnings reports. Disney is expected to report earnings after the close to hold a conference call at 4:30 p.m. ET Last Quarter: DIS reports declines in earnings and key revenue segments The company also warned of a slowdown in streaming growth This Quarter: The media giant is expected to post a sharp decline in earnings per share year over year , data from Refinitiv shows What CNBC entertainment reporter Sarah Whitt en observed, “While shareholders will still determine how many subscribers Disney’s suite of streaming services added during its fiscal first quarter report, Wednesday’s report will focus on the return of CEO Bob Iger. His reinstatement coincides with a contentious proxy fight with activist investor Nelson Peltz, and follows a tough year for the company’s stock as rising streaming costs and a tight slate of theatrical releases eroded profits. This is Iger’s first earnings call since early 2020, and his words will set the tone for the media company’s future.” What the story shows: Tailored data shows that Disney beats earnings per share estimates nearly 80% of the time. The performance of the However, stock is muted on earnings day, according to data Stock is down 13% on latest earnings day Thursday PayPal will report earnings after the close followed by a call at 5pm ET Last Quarter: PYPL fell on mild sales guidance for the fourth quarter. This quarter: According to Refinitiv, PayPal’s revenue and earnings are expected to be up slightly from the same period last year. What CNBC is watching: Investors will be looking for clues as to whether the payments giant can maintain its market share. “We believe the key metrics for the upcoming Print 4Q22 will be US branded [total payment volume] Growth where we think the bogeyman is ~4% y/y (lower end of averages reported by US eComm),” Deutsche Bank analyst Bryan Keane wrote to FactSet.
https://www.cnbc.com/2023/02/05/earnings-playbook-cmg-and-dis-kick-off-the-second-half-of-the-season.html CMG and DIS start the second half of the season