Earnings playbook: Your best moves ahead of Chipotle, Disney and the second half of reporting season
We’re halfway there. Roughly 50% of S & P 500 companies have posted earnings thus far, and the results have been mixed. Just 69.7% have beaten expectations, according to FactSet. That beat rate is below a 79% three-year average beat rate, according to data from The Earnings Scout. There have been some big positive surprises, including Microsoft and Meta Platforms. Apple and Google-parent Alphabet, however, both posted quarterly misses. This week kicks off the second half of the earnings season, with 87 S & P 500 companies on deck to report. These include Disney and Chipotle Mexican Grill. Here’s a breakdown of what to expect from those two reports, as well as other key names. Tuesday Chipotle Mexican Grill is set to report earnings after the bell, followed by a conference call at 4:30 p.m. ET. Last quarter: CMG posted better-than-expected results as higher ticket prices offset weakening customer visits . This quarter: Analysts polled by Refinitiv expect earnings per share to have jumped nearly 60%. They also forecast a double-digit revenue expansion. What CNBC restaurant reporter Amelia Lucas is watching: “In recent quarters, the biggest question for Chipotle has been how strong the burrito chain’s pricing power is. CEO Brian Niccol has said the company hasn’t seen significant resistance to higher prices, but its traffic fell in the third quarter. Will the trend reverse — or worsen? The chain recently announced it’s looking to beef up its workforce by adding 15,000 restaurant-level employees, a sign that demand may holding steady despite inflationary pressures.” What history shows: Data from Bespoke Investment Group shows Chipotle beats earnings expectations 76% of the time and averages a 1.7% gain on earnings day. The company has also posted better-than-expected earnings for seven straight quarters, per FactSet. Wednesday CVS Health is set to report earnings before the open, with management slated to hold a call at 8 a.m. ET. Last quarter: CVS raised its outlook and posted a quarterly revenue that beat expectations . This quarter: The company’s top line is expected to be little changed from the year-earlier period, while earnings are forecast to have dropped slightly, per Refinitiv. What CNBC is watching: CVS said in early January that it expects Medicare Advantage enrollment will grow in the mid-single digits in 2023. This is “disappointing given it is below market growth of high-single digits,” Mizuho analyst Ann Hynes said in a note last month. Updates on that front could lead to positive, or negative, swings for the stock. What history shows: CVS’s earnings per share have exceeded analyst expectations for 27 straight quarters, FactSet data shows. Yum Brands is set to report earnings before the bell, followed by a conference call at 8:15 a.m. ET. Last quarter: YUM reported a weaker-than-expected profit as a strong U.S. dollar offset sales increases at KFC and Taco Bell . This quarter: Analysts expect a profit jump of more than 20%, Refinitiv data shows, but revenue is only forecast to grow slightly. What CNBC restaurant reporter Amelia Lucas is watching: “The restaurant company, which owns KFC, Taco Bell and Pizza Hut, is expected to report strong U.S. sales, but the focus will be on its international performance. Rival McDonald’s said that European markets are performing better than expected. Investors will also be listening for updates on how China, KFC’s largest market, is bouncing back after the government relaxed its zero-Covid policy.” What history shows: Bespoke data shows that Yum Brands beats earnings estimates 82% of the time. However, the fast food company has posted four straight quarterly misses, according to FactSet. Uber Technologies is set to report earnings before the bell, followed by a call at 8 a.m. ET. Last quarter: UBER reported a revenue beat and issued strong gui dance, sending the stock higher by 11% . This quarter: The ride-sharing giant is expected to report year-over-year revenue growth of more than 40%, according to Refinitiv. What CNBC is watching: While Uber’s top line is expected to have grown sharply, investors will be looking for clues on how much progress the company has made toward becoming profitable. “We estimate Bookings experience a 20% ’22-’24 CAGR and 3%/4% upside to ’23/’24 cons, with an underlying assumption that UBER simply maintains existing Rideshare/Restaurant Delivery market share. We also expect continued progress toward ~$5B+ in ’24 EBITDA, which should improve confidence in long-term profitability,” wrote Jefferies analyst John Colantuoni in a Jan. 29 note. What history shows: Uber averages a 1.12% gain on earnings day despite beating estimates just 47% of the time, according to Bespoke. However, the stock has fallen after two of the last three quarterly reports. Disney is set to report earnings after the close. Corporate leadership is slated to hold a call at 4:30 p.m. ET. Last quarter: DIS posted misses on earnings and key revenue segments. The company also warned of tapering streaming growth . This quarter: The media giant is expected to post a sharp drop in year-over-year earnings per share, Refinitiv data shows. What CNBC entertainment reporter Sarah Whitten is watching: “While shareholders will still key on how many subscribers Disney’s suite of streaming services added during the fiscal first-quarter report, the focus of Wednesday’s report will be the return of CEO Bob Iger. His reinstatement coincides with a contentious proxy battle with activist investor Nelson Peltz and follows a rough year for the company’s stock, as soaring streaming costs and a slim slate of theatrical releases ate into profits. This is Iger’s first earnings call since early 2020 and his words will set the tone for the future of the media company.” What history shows: Bespoke data shows Disney beats earnings per share estimates nearly 80% of the time. However, the stock’s earnings day performance is muted, according to the data. On its most-recent earnings day, the stock dropped 13%. Thursday PayPal is set to report earnings after the close, followed by a call at 5 p.m. ET. Last quarter: PYPL dropped on light revenue guidance for the fourth quarter . This quarter: PayPal’s top and bottom lines are expected to have grown slightly from the year-earlier period, according to Refinitiv. What CNBC is watching: Investors will be looking for clues on whether the payments giant can maintain its market share. “We believe the most important metrics on the upcoming print will be 4Q22 US Branded [total payment volume] growth where we think the bogey is ~4% Y/Y (lower end of US eComm reported averages),” wrote Deutsche Bank analyst Bryan Keane. What history shows: PayPal earnings have beaten analyst earnings expectations nine of the last 10 quarter, according to FactSet.