Along with several technology companies reporting earnings in the coming days, the consumer sector also has a busy week ahead. Know what to watch for when Chipotle Mexican Grill, Inc. (NYSE:CMG), McDonald’s Corporation (NYSE:MCD), and The Coca-Cola Co (NYSE:KO) post earnings.
Chipotle Mexican Grill
Chipotle (CMG) will post third quarter earnings tomorrow after market close. Analysts are expecting the fast-casual Mexican food chain to post earnings per share of $4.62; an 11.3% year-over-year increase; and quarterly revenue of $1.22 billion; a nearly 13% year-over-year increase.
Chipotle quickly gained popularity in the last few years as a leader in the fast-casual dining segment. The company prides itself on its transparent food sources to the point that it removed carnitas (pork) from one third of its restaurants in January after uncovering that one of its suppliers failed to meet stringent animal welfare standards. After a long and pork-less several months, Chipotle fans rejoiced when the company announced in September that it reached an agreement with a new supplier.
Aside from the return of carnitas, analysts will be looking for same-store sales growth figures. Chipotle posted impressive double-digit figures in 2014 as the company gained a loyal following, but analysts warn that these figures are not sustainable and predict low-to-mid single digit same-store sales growth. Furthermore, Chipotle is making efforts to improve its digital engagement as it just appointed Curt Garner; Starbucks’ Chief Information Officer; as Chipotle’s new CIO.
According to TipRanks, 7 of the 10 analysts who have rated Chipotle in the last 3 months are bullish on the company while the remaining 3 are staying on the sidelines. The average 12-month price target for the company is $779.10, marking a 7.8% potential upside from current levels.
McDonald’s (MCD) will release third quarter earnings on Thursday morning. Analysts expect the company to post earnings per share of $1.27 on revenue of $6.5 billion, compared to the same quarter last year in which it posted $1.09 and $6.9 billion, respectively.
McDonald’s has faced tough consumer sentiment as the company attempts to rebrand and turn around after developing an unfavorable reputation. The fast-food chain recently unveiled all day breakfast plans, which has been met with mixed results. For the most part, consumers are happy with the change and analysts hope that all-day breakfast will boost sales. However, many locations complain that it is overwhelming for the kitchen and causing longer wait times.
Analysts will also be looking for growth in international markets to see if expansion and advertising efforts have paid off, specifically in Germany, England, and Australia. Analysts warn that same-store sales growth may have fallen, but hope that all-day breakfast will boost this metric quickly.
According to the 5 analysts polled by TipRanks in the last 3 months, 4 are bullish on McDonald’s while one is staying on the sidelines. The average 12-month price target for the fast food company is $112.50, marking a 7.33% potential upside over current levels.
The Coca-Cola Company
Coca-Cola (KO) will post third quarter earnings on Wednesday before market open. Analysts estimate that the company will post earnings per share of $0.50 and quarterly revenue of $11.56 billion, down year-over-year from $0.53 and $11.98 billion, respectively.
Coca-Cola warns that operating income will be adversely impacted by strong currency headwinds. A strong U.S. dollar weighs on international sales, which accounted for more than half of the company’s revenue in 2014. The company also warns that revenue may be impacted by reorganizational changes within the company, such as consolidations within bottling operations.
Analysts note that Coca Cola is becoming a stronger brand because it no longer relies purely on sugary drinks, which have come under fire for health concerns. The company has made deals with energy drink, juices, milk and water distributors to diversify its offerings as public sentiment turns against soda. However, analysts note that there is room for Coca Cola to expand its soda sales in developing countries.
According to the 4 analysts polled by TipRanks in the last 3 months, 3 are bullish on Coca-Cola while one is bearish. The average 12-month price target for the company is $44.25, marking a 5.3% upside from current levels.