y Colin Cieszynski, Chief Market Strategist
and Jasper Lawler, Market Analyst
These two companies have seen a sharp drop in their share price in the past year after scandals hit both companies. Can Q1 earnings see investors return?
Chipotle Earnings Preview
(Confirmed reporting date: 26/4/16)
It would be a severe understatement to suggest that expectations are pessimistic for this quarter. Chipotle is set to report its first ever quarterly loss since going public.
Traffic into Chipotle restaurants has collapsed since several disease outbreaks caused hundreds of sick customers. Chipotle has been trying to get the traffic back by direct marketing and coupon campaigns. The reduced traffic is the main driver of the lower revenues but the loss could be compounded by the cost of intense marketing and discounting.
Last quarter, the company beat the street on earnings $2.50 to $2.03 but missed on sales at $997M. The big question this time around is how much damage has been done by its tarnished reputation? The street is expecting a loss of $0.96 on sales of $868M down 20% from last year.
It remains to be seen if results will be good enough to stop the bleeding or if the dams could give way again.
Since peaking above $750 back in October, the shares have plunged back into the $400-500 range following a series of major setbacks for the company that sent same store sales down 36% over year in January.
(Source: CMC Markets, 16/4/16)
Valeant Earnings Preview
(Expected reporting date: 29/4/16)
Valeant has just named Joseph Papa as new CEO in what is going to be a long road of needed reform. The company still faces political pressure from the presidential campaign trail over ‘price gauging.’ An investigation of the company’s relationship with Philidor RX Services by the SEC is ongoing.
In light of its recent scandals, the most important thing Valeant can do this quarter is issue a clean report, confirm that restatements of previous results are finished and file its 10K report to get its creditors off its back.
Because of its reporting problems, it’s hard to compare current results with previous quarters or to tell how the street would take a surprise. For what it’s worth, the current consensus estimate is for adjusted EPS of $1.38 on sales of $2.35B.
Shares near $31.50 are trading up a bit from their 52-week low near $25.00 but still way down from their 52-week high near $264.
(Source: CMC Markets, 16/4/16)
For further comment from Jasper Lawler, please call 0203 003 8907
Follow CMC Markets on Twitter: @cmcmarkets
Follow Jasper Lawler (Market Analyst) on Twitter: @jlawler_cmc
CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
CMC Markets er en ‘execution-only service’ leverandør. Dette materialet (uansett om det uttaler seg om meninger eller ikke) er kun til generell informasjon, og tar ikke hensyn til dine personlige forhold eller mål. Ingenting i dette materialet er (eller bør anses å være) økonomiske, investeringer eller andre råd som avhengighet bør plasseres på. Ingen mening gitt i materialet utgjør en anbefaling fra CMC Markets eller forfatteren om at en bestemt investering, sikkerhet, transaksjon eller investeringsstrategi. Denne informasjonen er ikke utarbeidet i samsvar med regelverket for investeringsanalyser. Selv om vi ikke uttrykkelig er forhindret fra å opptre før vi har gitt dette innholdet, prøver vi ikke å dra nytte av det før det blir formidlet.