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KEY POINTS
OVERALL MARKET
The stock market indices continue growth thanks to upbeat earnings reports despite COVID fears.
The market ended the day in the green once again, with all 3 indices adding nearly 1% by the end of the session.
The COVID delta variant news and case numbers continue to dampen investors’ hopes of a smooth transition back to a normal economy. However, upbeat earnings reports and slow but steady growth is keeping the gains alive across industries. GET THE DAILY MARKET RECAP
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Chipotle (CMG) smashed expectations with its earnings report, and share prices jumped over 11%.
I saw a familiar and favorite name of mine on today’s Stock Card winner’s list. Chipotle Mexican Grill (CMG) shares jumped 11.5% by closing time. This is due to an impressive earning’s report released yesterday evening. Revenue was up 38.7% year-over-year, and according to the report, comparable restaurants saw a 31.2% growth. The company particularly killed it with online orders during shutdowns, accounting for 48.5% of sales!
A strong indicator I noticed in the earnings was Chipotle’s margins. Generally speaking, restaurants operate on thin margins, many within 2-6%. While being a large and established corporation can help ease that, it’s worth noting that Chipotle managed to pull its margins from -0.4% last year, to +13%! Sounds like management has been focusing on the effectiveness of its operations. The company’s Stock Card boasts impressively strong operations to prove it, practically green across the board on all sections of operations. While the restaurant industry isn’t expected to boom in the near future, the sales growth and profitability sections on Chipotle’s Stock Card are solid. Remember when Chipotle shares dipped due to the E-Coli outbreak? Since then, the stock has tripled in value. The lesson is when a well-managed company with cash is beaten down, for patient investors, there is nothing better to do than doubling down and owning the shares. WHAT'S DOWN?
4-greener stock Sleep Number (SNBR) dropped -12% despite good earnings. Is this dip worth buying?
A 4-greener Stock Card made it to today’s losers list. I investigated Sleep Number Corp’s (SNBR) -12% drop today, after what seemed to be a positive earning’s report. Sleep Number’s stock had risen more than double in the past year, so it appears investors were expecting great numbers to back it up. While the company did post good numbers, analysts were expecting even more. For example, the $0.80 earnings per share were alright, but not quite the expected $1.11. The company mentioned that year-to-date demand was up 40%, but with earnings per share not reaching expectations, investors may be less sure of the company’s ability to make the most out of the demand. The CEO blamed supply chain issues in June and July for hurting its numbers. Despite this, sales were still up 70%.
The Stock Card is a 4-greener, and the company shows strong operations and a great return on investment for shareholders. The only slightly concerning factor is a poor debt-to-equity ratio, which is the amount of debt used to finance compared to investor equity used to finance. If the company can take advantage of the demand and slim down its margins, it could be on a better track financially. Clearly, the company doesn’t have any big issues plaguing it at the moment, but of course, it could always be more profitable. If you scroll down, investor sentiment is still calm, and the company is undervalued. At a 1.4 price-to-sales ratio, the stock isn't priced too high. The supply challenges, however, may take a while to get sorted. If you invest in it, go slow not to get shocked if the stock continues to drop. I used to own shares, and I may buy back some again. WANT TO RECIEVE THIS DAILY STOCK MARKET RECAP IN YOUR MAILBOX?Comments are closed.
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