Please ensure Javascript is enabled for purposes of website accessibility

Chipotle Spikes and DreamWorks Sinks on a Flat Day for Stocks

By Demitri Kalogeropoulos – Feb 1, 2016 at 6:13PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Indexes fell by as much as 1% at one point today before recovering to end unchanged.

Stocks spent nearly all of the trading session in negative territory, touching a 1% loss before climbing back to end the day roughly where they started. The Dow Jones Industrial Average (^DJI -1.11%) lost 18 points, or 0.1% and the S&P 500 (^GSPC -1.03%) shed just 1 point, for no change.

^INX Chart

^INX data by YCharts

Yet many individual stocks posted large price swings even as the broader market ran in place. Chipotle (CMG -1.64%) and DreamWorks Animation (DWA) were among the largest movers today.

Chipotle puts an outbreak behind it
Chipotle's shares rose 4%, to bring its recent rally up to a 16% gain since touching $400 per share last month. Today's pop came as the U.S. Centers for Disease and Prevention (CDC) officially closed its investigation into two E. coli outbreaks that were traced to a number of the restaurant chain's locations across a dozen states. "These two outbreaks appear to be over," the CDC said.

Image source: Chipotle.

The news comes at a good time for Chipotle, which will post its fourth-quarter earnings results on Tuesday, Feb. 2, and is expected to show its first-ever negative sales growth result. Consensus estimates forecast revenue sinking by 6% to $1 billion as comparable-store dive by roughly 15%. Earnings, meanwhile, should be sliced in half to $1.86 per share as profitability plunges.

Investors will be keenly interested in management's comments about the most recent customer traffic trends. We know that comps plummeted to as low as -37% at one point in December when the food safety scare was making national news. However, through actions like ramped up stock buybacks and aggressive store expansion plans, executives have signaled their confidence that Chipotle will eventually return to its market-thumping sales growth and profit margin figures. We'll find out tomorrow just how long that rebound might take.

DreamWorks Animation and Kung Fu Panda 3
DreamWorks fell 7% after its animated film Kung Fu Panda 3 pulled in $41 million at the box office over its debut weekend. That should be considered a solid showing for the company, after all, it was the best-ever January opening for an animated film, according to Box Office Mojo, and nearly beat 2014's Ride Along to become the all-time best theatrical launch for the month of January .

Image source: DreamWorks.

In terms of DreamWorks' portfolio, though, Kung Fu Panda 3's release trailed its 2015 hit, Home. And, given the strength of the franchise, investors may have been hoping for the movie to open at something closer to How to Train Your Dragon 2, which pulled in $50 million in its debut on its way to almost $200 million of receipts.

CEO Jeffrey Katzenberg warned shareholders not to get too excited about the Panda sequel, thanks to that soft January launch timing. "I do want to highlight that we have a non-traditional release window for an animated film in the U.S. market," he said in an earnings conference call. The good news is that family friendly competition is light over the next few weeks, and so Panda 3 could still bulk up its ticket sales to reach strong profitability.

DreamWorks only other feature film release of the year, called Trolls, will occur in early November. It's a brand new property, which makes it a riskier bet than sequels from proven franchises like Kung Fu Panda and How to Train Your Dragon. On the other hand, the film has a solid opening spot heading to the holidays, and it boasts a strong voice cast led by Anna Kendrick and Justin Timberlake.

Demitrios Kalogeropoulos owns shares of Chipotle Mexican Grill. The Motley Fool owns shares of and recommends Chipotle Mexican Grill. The Motley Fool recommends DreamWorks Animation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$29,260.81 (-1.11%) $-329.60
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,655.04 (-1.03%) $-38.19
Chipotle Mexican Grill, Inc. Stock Quote
Chipotle Mexican Grill, Inc.
CMG
$1,531.99 (-1.64%) $-25.53
DreamWorks Animation SKG Inc. Stock Quote
DreamWorks Animation SKG Inc.
DWA

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.