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Look What These 2 Stock Winners Just Told Shareholders

By Dan Caplinger - Jul 22, 2021 at 10:35AM

Key Points

  • Markets were mixed on Thursday morning.
  • Earnings season continued to reveal how companies are performing.
  • Two stocks in particular, one restaurant operator and one railroad company, saw solid gains.

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Thursday's success stories offer some interesting prospects for investors.

The stock market opened mixed on Thursday morning, pausing to catch its breath after a topsy-turvy set of moves to begin the week. After having plunged on Monday, major market benchmarks gained back just about all of their lost ground on Tuesday and Wednesday. As of 10:15 a.m. EDT Thursday, the Dow Jones Industrial Average (^DJI 0.71%) was down 27 points to 34,771. However, the S&P 500 (^GSPC 0.19%) had gained 2 points to 4,360, and the Nasdaq Composite (^IXIC 0.00%) was higher by 36 points to 14,668.

Earnings season continues to pick up speed, and a couple of well-known stocks offered their latest look at their respective businesses. Domino's Pizza (DPZ 0.02%) and Union Pacific (UNP 1.33%) both saw their stock prices gain ground after releasing their reports. Below, we'll look more closely to see what the two companies said and what it means for their future.

Delivering the goods

Shares of Domino's Pizza jumped more than 10% Thursday morning. The pizza restaurant chain's second-quarter results were a lot better than many had expected even as the economy emerges from the pandemic and patrons start to return to dine-in restaurants versus relying on delivery.

Three people eating pizza on a rooftop.

Image source: Getty Images.

Domino's numbers were impressive. Global retail sales were up nearly 22% year over year, with same-store sales climbing 3.5% in the U.S. market and 13.9% internationally. Domino's opened more than 200 new locations internationally to go with 35 new stores in the U.S., and adjusted earnings of $3.12 per share came in 4% higher than year-ago levels.

Domino's also recommitted to returning capital to shareholders. The company approved a new $1 billion stock repurchase program, having used up its previous buyback. That supplements a modest dividend of $0.94 per share that works out to a yield of less than 1% on the stock.

Many investors had feared that people who were tired of pizza delivery might abandon Domino's, causing a pullback in sales. However, that wasn't the case, and Domino's now looks more optimistic than ever about its long-term growth prospects.

Chugging along

Meanwhile, shares of Union Pacific were up more than 2%. The railroad operator reported record earnings in the second quarter and had other good things to say about its business.

The extent of Union Pacific's rebound showed how extensive the damage from the pandemic was in the year-earlier period. Revenue jumped 30% on a 22% rise in shipment volume. Operating ratios improved by nearly 6 percentage points to 55.1%, and earnings of $2.72 per share soared more than 60% year over year.

Union Pacific saw strength just about across the board. Revenue from auto shipments more than doubled from year-ago levels, and intermodal shipments brought in 33% more in sales. Forest products, metals, and energy products also spurred a better top-line performance for the railroad.

Stock repurchases have also played a role in Union Pacific's share price, with the railroad having spent $2.7 billion buying back 12.2 million shares in the second quarter alone. Combined with a dividend yield of nearly 2%, Union Pacific remains dedicated to returning capital to shareholders as well.

Railroad stocks took a hit earlier this month on fears that the Biden administration would discourage consolidation and alliances in the transportation sector. However, that threat isn't stopping Union Pacific from putting up strong financial numbers, and investors like what they're seeing.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Domino's Pizza and Union Pacific. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Domino's Pizza, Inc. Stock Quote
Domino's Pizza, Inc.
$410.93 (0.02%) $0.07
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$34,152.01 (0.71%) $239.57
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,305.20 (0.19%) $8.06
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$13,128.05 (0.00%) $0.00
Union Pacific Corporation Stock Quote
Union Pacific Corporation
$241.35 (1.33%) $3.18

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

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