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Wednesday July 24, 2024



Chipotle Cooks Up Earnings

Chipotle Mexican Grill, Inc. (CMG) announced its fourth quarter and full-year earnings report on Tuesday, February 6. The fast-casual chain restaurant company’s shares were up more than 2% following the report’s release.

Chipotle reported net revenue for the quarter of $2.52 billion, up 15.4% from $2.18 billion reported at this time last year. Net revenue was above analysts’ expectations of $2.49 billion. For the full year, the company reported $9.87 billion, up 14.4% from $8.63 billion one year ago.

"2023 was an outstanding year where we delivered strong transaction growth driven by throughput and menu innovation, opened a record number of new restaurants, surpassed $3 million in AUVs and formed our first international partnership," said Chipotle CEO, Brian Niccol. "I am more confident than ever that we have the right people and the right strategy to achieve our long-term growth goals of reaching 7,000 restaurants in North America, $4 million in AUVs, expanding our industry leading margins and returns and furthering our purpose of Cultivating a Better World globally."

The company reported net income of $282.09 million or $10.21 per diluted share. This is up from $223.73 million or $8.02 per diluted share in the same quarter last year. For the full year, the company reported net income of $1.23 billion, up from net income of $899.10 million in the year prior.

The California-based restaurant company reported an increase in comparable restaurant sales of 8.4% for the quarter. Food, beverage and packaging costs were 29.7% of total revenue. Digital sales made up 36.1% of food and beverage revenues. Chipotle reported an increase in food costs that was due to a higher mix of beef as well as inflation across the menu. The higher food costs were partially offset by the benefit of menu price increases and lower paper costs. The company opened 121 new restaurants, including 110 with the chain’s mobile-order drive-through lanes called Chipotlanes, bringing the total number of restaurants to 3,437 at the end of the quarter.

Chipotle Mexican Grill, Inc. (CMG) shares ended the week at $2,638.35, up 5% for the week.

e.l.f. Beauty Reports Third Quarter Earnings

e.l.f. Beauty, Inc. (ELF) released its latest quarterly earnings on Tuesday, February 6. The American cosmetic brand surpassed sales and profit expectations causing shares to rise by approximately 4% following the release of the report.

The company reported revenue of $270.9 million, up 85% from $146.5 million during the same quarter last year. This exceeded analysts’ expectations of $238.9 million in revenue.

“Our vision is to create a different kind of beauty company and you can see that in the exceptional, consistent, category-leading growth we have delivered," said e.l.f Beauty's CEO, Tarang Amin. "In Q3, we grew net sales by 85% and market share by 305 basis points, marking our 20th consecutive quarter of growth in each. I am extremely proud of our team and the progress we continue to make across color cosmetics, skin care and internationally."

e.l.f. posted net income of $26.9 million or $0.46 per diluted share for the third quarter. This was up from $19.1 million or $0.34 per diluted share during the same time last year.

The Oakland, California-based cosmetic company attributed their substantial increase in net sales to strength in both its retailer and e-commerce channels. e.l.f. Beauty saw its gross margin increase 350 basis points to 71% in the quarter, which was predominantly driven by favorable exchange impacts, better transportation costs, cost savings and mix. The company raised its 2024 Fiscal Outlook to reflect net sales of $980 to $990 million compared to $896 to $906 million previously expected.

e.l.f. Beauty, Inc. (ELF) shares ended the week at $174.52, up 1% for the week.

Disney Posts Quarterly Results

The Walt Disney Company (DIS) reported its first quarter earnings on Wednesday, February 7. The company’s stock rose more than 7% following the release of the report.

Revenue for the first quarter was $23.55 billion, relatively unchanged from revenue earned last year at this time. Revenue fell below analysts’ expectations of $23.64 billion.

“Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences,” said Disney CEO, Robert A. Iger. “As we build for the future, the steps we are taking today lend themselves to solidifying Disney’s place as the preeminent creator of global content. Looking at the renewed strength of all of our businesses this quarter – from Sports, to Entertainment, to Experiences – we believe the stage is now set for significant growth and success, including ample opportunity to increase shareholder returns as our earnings and free cash flow continue to grow.”

Disney posted net income of $2.15 billion for the quarter or $1.04 per adjusted share. Last year at this time, the company reported a net income of $1.36 billion or $0.70 per adjusted share.

The company’s Experiences segment posted revenue of $9.1 billion, a 7% jump from $8.5 billion one year ago. Revenue for Disney’s Entertainment segment decreased by 7% to $10.0 billion. Sport revenues came in at $4.8 billion, a 4% increase from the year prior. Disney’s Direct to Consumer (DTC) streaming businesses, part of its Entertainment segment posted revenue of $5.5 billion, a 15% increase from last year. DTC’s revenue growth is attributable to higher rates and subscriber growth at Disney+ Core and Hulu. Disney’s board of directors declared a quarterly cash dividend of $0.45 per share, which will be due to the stockholders of record on July 8, 2024, with an anticipated payment date of July 25, 2024.

The Walt Disney Company (DIS) shares ended the week at $108.39, up 12% for the week.

The Dow started the week of 2/5 at 38,547 and closed at 38,672 on 2/9. The S&P 500 started the week at 4,957 and closed at 5,027. The NASDAQ started the week at 15,614 and closed at 15,991.

Treasury Yields Vary

U.S. Treasury yields dipped early in the week after remarks from Federal Reserve Chair Jerome Powell suggesting that imminent rate cuts were unlikely. Yields rose towards the end of the week following jobless claims data showing fewer unemployment filings than expected.

Federal Reserve Chair Jerome Powell made an appearance on the CBS show, “60 Minutes” that aired on February 5. In the interview, Powell confirmed forecasts for three interest rate cuts this year but pushed back on any expectations that the rate cuts would be soon approaching, as he assured the timing of the rate cuts hinge solely on economic data.

“If the economy were to weaken, then we could reduce rates earlier and perhaps faster,” said Powell. “If the economy were to prove — if inflation were to prove more persistent, that could call for us to reduce rates later and perhaps slower. So, it really is going to be dependent on the incoming data as that affects the outlook.”

The benchmark 10-year Treasury note yield opened the week of February 5 at 4.02% and traded as high as 4.17% on Thursday. The 30-year Treasury bond opened the week at 4.22% and traded as high as 4.38% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 9,000 to 218,000 for the week ended February 3. This came in lower than economists’ forecast of 220,000 claims for the week. Continuing unemployment claims decreased by 23,000, reaching 1.87 million.

“The basic message from today's report is not only are there not enough job losses to point to a recession, there are no significant job losses to see at all,” said chief economist at FWDBONDS, Christopher Rupkey. “The belt-tightening layoffs and cost-cutting talked about in many company earnings reports is not showing up in the weekly unemployment claims statistics.”

The 10-year Treasury note yield finished the week of 2/5 at 4.17%, while the 30-year Treasury note yield finished the week at 4.37%.

30-Year Mortgage Holds Steady

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, February 8. The survey showed the 30-year mortgage rate holding steady and remaining relatively unchanged from the week prior.

This week, the 30-year fixed rate mortgage averaged 6.64%, up from last week’s average of 6.63%. Last year at this time, the 30-year fixed rate mortgage averaged 6.12%.

The 15-year fixed rate mortgage averaged 5.90% this week, down from last week’s 5.94%. During the same week last year, the 15-year fixed rate mortgage averaged 5.25%.

“Mortgage rates remain stagnant, hovering in the mid 6% range over the past several weeks,” said Freddie Mac’s Chief Economist, Sam Khater. “The economy and labor market remain strong with wage growth outpacing inflation, which is keeping consumer spending robust. Meanwhile, affordability in the housing market is an ongoing issue due to continued high home prices, elevated mortgage rates and low supply of homes on the market, particularly for first-time and low-income homebuyers.”

Based on published national averages, the savings rate was 0.47% as of 1/16. The one-year CD averaged 1.86%.

Editor’s Note: The publicly available financial information is offered as a helpful and informative service to our friends. This article is not an endorsement of any company, product or service.

Published February 9, 2024
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