Earnings Previews: Chipotle Mexican Grill, Netflix, United Airlines

With the first week of the June-quarter earnings season behind us, we are looking ahead to what the coming week has in store. On Friday, we previewed three companies scheduled to report quarterly results after Monday’s closing bell: IBM, PPG and Steel Dynamics.

We also have previewed four firms that are set to report earnings before markets open on Tuesday morning: Halliburton, HCA, Philip Morris and Synchrony Financial.

Here’s a look at three reports due out after markets close Tuesday.

Chipotle Mexican Grill

Fast-food chain Chipotle Mexican Grill Inc. (NYSE: CMG) saw its share price plummet by nearly 50% by mid-March last year. Since then, the stock is up 235%, but the pace of growth has slowed. Shares are up 37.7% over the past 12 months and 12.5% for the year to date. The company adapted to the pandemic by adding drive-thru lanes and instituting a loyalty program. Both contributed considerably to the company’s performance following the disastrous first quarter of 2020.

Of 32 surveyed analysts following the stock, 21 rate the shares a Buy or Strong Buy. Most of the rest (10) rate the stock a Hold. At a recent share price of around $1,560, the stock’s upside potential based on a median price target of $1,750 is about 12.2%. At the high price target of $2,100, the implied upside is almost 35%.

Analysts expect the restaurant chain to post revenue of $1.88 billion for the June quarter, up 8% sequentially and up 38% year over year. Adjusted earnings per share (EPS) are expected to come in at $6.48, up from $5.36 in the March quarter and way up from $0.40 in the same quarter of 2020. For the full fiscal year, analysts are looking from EPS of $14.59, up 129% year over year, with revenue up 23.5% to $7.39 billion.

At the current price, Chipotle’s stock trades at around 62.8 times expected 2021 EPS, 47.6 times estimated 2022 EPS and 37.7 times estimated 2023 earnings. The 52-week trading range is $1,094.93 to $1,626.57. The company does not pay a dividend.

Netflix

Streaming video giant Netflix Inc. (NASDAQ: NFLX) has had an up-and-down 18 months. Since January of last year, the stock is up about 61%, but over the past 12 months, shares are up just 1.4%. For the year to date, the stock is down about 2%.

Netflix is judged more on how many net new subscribers it adds than on actual financial results. During the first quarter, subscriber numbers fell by 2 million and the share price dropped by 7%. The company’s revenue has been rising as Netflix raises its prices. The other item that will be closely watched Tuesday is how successful the company’s streaming video game component has been.

About 75% of analysts covering the stock rate the shares a Buy (23) or Strong Buy (eight). Another five rate the stock a Hold, and five more have rated the shares a Sell (three) or Strong Sell (two). At a median price target of $617 and a current price of around $530.30, the potential upside on the stock is 16.3%. At the high price target of $730, the upside potential rises to nearly 38%.

The average revenue estimate for the second quarter is $7.32 billion, up 2.2% sequentially and 19% year over year. EPS are expected to be $3.15, down 16% sequentially and up 98% year over year. For the full year, current estimates call for EPS of $10.55, up nearly 74% year over year, and revenue is forecast at $29.73 billion, up nearly 19%.

At the current price, Netflix stock trades at around 50.3 times expected 2021 EPS, 23.5 times estimated 2022 EPS and 31.6 times estimated 2023 earnings. The 52-week range is $458.60 to $593.29. The company does not pay a dividend.

United Airlines

United Airlines Holdings Inc. (NASDAQ: UAL) has been fighting back from a low posted last May of less than $25 a share. The stock reached a high of nearly $64 in March but has since given back about $17. Over the past 12 months, shares are up about 26.5%, while the year-to-date gain has been pared to around 6.4%. Uncertainty about new strains of the coronavirus and the impact that will have on air travel, particularly international travel, continues to weigh on the stock.

Analysts’ ratings are mixed. Eleven of them rate the stock a Hold, while eight have assigned the shares a Buy or Strong Buy rating. Three rate the stock a Strong Sell. At a price of around $46, the implied upside based on a median price target of $59 is 28%. At the high price target of $78, the upside potential reaches nearly 70%.

The recovery in air travel is expected to result in second-quarter revenue of $5.33 billion, up from $3.22 billion in the first quarter and $1.48 billion in the same quarter last year. The airline is expected to post an adjusted loss per share of $3.96, compared to a first-quarter loss of $7.70 per share and a year-ago loss of $9.31 per share. For the full year, analysts forecast a loss per share of $12.46, less than half the 2020 loss of $27.57 per share.

United Airlines stock trades at around 14.6 times estimated 2022 EPS of $3.15 and 5.5 times estimated 2023 EPS of $8.32. The 52-week range is $30.32 to $63.70. The company has suspended its dividend.

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