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Why Chipotle Mexican Grill, UPS, and Snap Jumped Today

By Evan Niu, CFA - Jul 24, 2019 at 4:30PM

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These companies impressed investors with their second-quarter earnings results.

It was a record day for the stock market on Wednesday, though major indexes had mixed showings. The S&P 500 and the Nasdaq Composite notched new all-time highs as investors brushed aside news that the Department of Justice's antitrust division is reviewing the business practices of dominant tech giants to see if leading online platforms undermine competition. The Dow Jones Industrial Average posted a modest decline.

Earnings season is underway, and Chipotle Mexican Grill (CMG -0.27%)UPS (UPS 1.31%), and Snap (SNAP -4.21%) all revealed results that impressed investors.

Chipotle burrito next to chips and a small cup of guacamole

Image source: Chipotle.

Chipotle hits new highs

Burrito purveyor Chipotle continued its turnaround efforts, and investors sent shares up 5% following the company's second-quarter earnings release. Revenue jumped 13.2% to $1.4 billion, with comparable-restaurant sales increasing a whopping 10%, topping the 8.3% comps growth that analysts were modeling for. Digital sales nearly doubled and accounted for 18% of sales during the quarter, while restaurant-level operating margin expanded to 20.9%. Chipotle continues to explore new menu items and is preparing to launch carne asada following positive customer feedback in test markets, CEO Brian Niccol noted on the conference call. Adjusted earnings per share came in at $3.99, ahead of the $3.76 per share in adjusted profits that Wall Street was expecting. Chipotle also boosted its guidance and now expects comps to grow in the high single digits, up from a prior forecast of mid- to high-single-digit growth.

UPS gets a boost from e-commerce

Shares of UPS gained almost 9% after the shipping specialist attributed its second-quarter earnings beat to strong demand of next-day delivery services from e-commerce companies. "Demand for faster delivery is a structural change in our industry," CEO David Abney said in a statement. "Anticipating this change, our additional air capacity and modernized network enabled this growth to have a positive impact on profitability and positions UPS well to serve the growing needs of the market." Revenue in the second quarter increased 3.4% to $18.05 billion, with adjusted earnings per share of $1.96. Analysts had expected $17.97 billion in revenue and an adjusted profit of $1.93 per share. UPS reaffirmed its full-year guidance and continues to forecast adjusted earnings per share of $7.45 to $7.75 for 2019, allaying some macroeconomic fears about a slowing global economy.

Snapchat users top 200 million

Snap's stock soared 18.5% in the wake of the Snapchat operator's second-quarter earnings release, which included its best user gains in three years. Revenue increased 48% to $388 million, beating analyst expectations and the company's own outlook. The revamped Android version of Snapchat, combined with new augmented reality (AR) filters, helped Snapchat add 13 million daily active users (DAUs), its strongest user growth since the second quarter of 2016. Snapchat now has 203 million DAUs worldwide. Guidance was also strong, with revenue in the third quarter expected to be $410 million to $435 million, and adjusted EBITDA forecast at negative $60 million to negative $85 million. CFO Derek Anderson is "cautiously optimistic" that Snapchat can maintain its momentum with DAU growth in the back half of 2019.

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Stocks Mentioned

Chipotle Mexican Grill, Inc. Stock Quote
Chipotle Mexican Grill, Inc.
CMG
$1,290.63 (-0.27%) $-3.48
United Parcel Service, Inc. Stock Quote
United Parcel Service, Inc.
UPS
$173.29 (1.31%) $2.25
Snap Inc. Stock Quote
Snap Inc.
SNAP
$22.28 (-4.21%) $0.98

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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