Earnings Roundup: Chipotle Mexican Grill (CMG), Intel (INTC), & eBay (EBAY)

| July 25, 2012 | 0 Comments

Once again earnings season’s in full swing.  Big and small investors alike are taking a hard look at corporate earnings, revenue, and management guidance.

As you know, companies who beat analysts’ estimates often see their stocks soar higher.  While companies who fall short of expectations often see their stocks tumble lower.

Let’s take a closer look at a few of the stocks making big moves this earnings season – Chipotle Mexican Grill (CMG), Intel (INTC), and eBay (EBAY).

Chipotle Mexican Grill reported earnings of $2.56 per share on $690.9 million in revenue.  Revenue grew 20.9% year-over-year and EPS increased 61%.

It’s impressive growth at first glance.  But analysts were expecting revenue of $700 million.  The reason for the shortfall was comparable-store sales only grew 8%.  It’s a dramatic slowdown from the 10% growth in previous quarters.  And it was the slowest sales growth since 2010.

Slowing growth is bad news for high flying growth stocks like CMG.

As a result, CMG shares suffered their worst single day loss ever.  The stock fell $97 from $403.86 to $307.20 before recovering a bit to close at $316.98 on Friday.

What’s more, CMG faces stiff headwinds this quarter.

Consumer spending is slowing.  And soaring grain prices will likely drive up input prices.  That’s a recipe for another weak quarter.

Intel reported earnings of 58 cents per share on revenue of $13.5 billion.  They met expectations for revenue growth and beat expectations for EPS.  They also cut their 2012 revenue growth guidance to a range of 3% to 5%.

All in all, it was a solid quarter for the tech giant.

Their success was driven by strong demand for chips used in the servers powering the shift to cloud computing.  It’s a clear indication the cloud computing revolution is still in full swing.

INTC is still lagging behind in the mobile and tablet chipset market.  But they’ve made huge strides to catch up to the competition.

In fact, INTC has a huge opportunity to increase growth in this market.

Don’t forget, Microsoft’s (MSFT) Windows 8 platform is expected to be a huge success.  And it’s a good bet Intel chips will power many of these new devices running Windows 8.

eBay reported revenue increased 23% to $3.4 billion year-over-year.  Earnings per share came in at $0.56, a16% increase over the same quarter last year and a penny better than expected.  The company expects to make between $1.89 and $1.94 per share this year.

As a result, the stock jumped 12% to a high of $45.48 on Friday.

Their impressive growth is being fueled by their crown jewel… PayPal.

PayPal is fast becoming the payment option of choice for online shoppers.  Last quarter the number of active PayPal accounts increased 13% to 113.2 million accounts.  And revenue increased 26% year-over-year.

Management is expecting mobile transaction volume to more than double to $10 billion this year.  This is one technology that’s reaping the benefits of the shift to mobile devices.

What’s more, PayPal is moving offline as well.  They recently announced they’re working on rolling out a point of sale payment option with 16 large US retailers.

Clearly, PayPal is one growth story just starting to warm up.

Here’s the bottom line…

So far this quarter we’ve had more winners, like eBay, than losers, like Chipotle.

As of Friday, 61% of companies that reported beat analysts’ earnings estimates.  However, only 44% have beaten revenue estimates.  And 8.5% of companies have lowered guidance while just 2% have raised guidance.

If stocks are going to hold at these levels or move higher, we’ll need to see more of the same going forward.

Good Investing,

Corey Williams

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Category: Options Trading

About the Author ()

Corey Williams is the editor of Sector ETF Trader, an investment advisory service focused on profiting from ETFs and the economic cycle. Under Corey’s leadership, the Sector ETF Trader has become one of the most popular and successful ETF advisories around. In addition to his groundbreaking service, Corey is the lead contributor to ETF Trading Research, where he shares his insights about ETFs and financial markets on a daily basis. He’s also a regular contributor to the Dynamic Wealth Report and the editor of one the hottest option trading services around – Elite Option Trader.

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