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Disney, Chipotle earnings: What to know in markets Tuesday

Heidi Chung

More than halfway through earnings season, the spotlight will turn to a handful of big earnings reports Tuesday, including Disney (DIS) and Chipotle (CMG).

With the streaming wars running hot, media giant Disney will release its fiscal first-quarter results after the market close. Disney’s Q1 results will be even more closely monitored as it is the first report since the launch of its streaming service Disney+. Media companies have been going head-to-head in the highly competitive streaming space, and in its fiscal fourth-quarter, Disney reported operating losses of $740 million in the direct-to-consumer and international segments, which includes its streaming service.

Even as operating losses mount due to Disney’s streaming business, investors will likely applaud Disney+’s early success. Disney+ emerged in late 2019 as a strong competitor to reigning Netflix (NFLX), and according to MoffettNathanson, Disney is a winner.

“The exceptional launch of Disney+ is building a big enough lifeboat to stay afloat during these storms,” analyst Michael Nathanson wrote in a note Feb. 3. But it’s not just Disney’s place in the streaming wars that makes it a winner in media. “Strong results from ‘Frozen 2’ and ‘Star Wars: The Rise of Skywalker,’ Disney’s domination of the box office continued in the fourth quarter, taking in $1.1 billion (up +67%) and a 39% share including Fox.” Nathanson has a Buy rating on Disney stock with a $165 price target.

Analysts polled by Bloomberg expect Disney to report adjusted earnings of $1.47 per share on $20.82 billion in revenue.

Chipotle carne asada burrito bowl (Courtesy of Chipotle)

Fast casual restaurant Chipotle will also report fourth-quarter results after the market close Tuesday. Chipotle’s strong performance is likely to continue even against tough comparisons, according to Stifel analyst Chris O’Cull.

“Chipotle started 4Q strong, indicating [same-store sales] the first three weeks were running above the 11% posted in 3Q, and we surmise the momentum continued as the popular Carne Asada remained available during the quarter and the brand repeated last year's successful Free Delivery Bowl promotion,” O’Cull wrote in a note Feb. 3.

KeyBanc analyst Eric Gonzalez echoed O’Cull’s prediction for strong Q4 same-store sales despite tough comparisons. “Chipotle's [same-store sales] momentum was sustained at a high level in 4Q19, supported by menu innovation, advertising support (4% of sales vs. 2% in 3Q19), and another quarter of strong digital user growth (~+95% y/ y through 3Q19),” Gonzalez wrote in a note Jan. 30. “Our analysis of Key First Look Data from credit/debit cards shows an uptick in indexed spend growth during the quarter relative to 3Q19.”

Consensus estimates were for same-store sales growth of 9.5% during Chipotle’s fourth quarter. Meanwhile, Chipotle is expected to report adjusted earnings of $2.73 per share on $1.4 billion in revenue.

Other earnings and economic calendar

Other notable reports scheduled for Tuesday include: Clorox (CLX), McKesson (MCK) before market open; Ford (F), Gilead Sciences (GILD), Snap (SNAP), and Match Group (MTCH) after market close.

On the economic calendar, investors can expect the following: Factory orders, December (+1.1% expected, -0.7% prior); Durable goods orders, December final (+2.4% expected, +2.4% prior); Non-defense capital goods shipments excluding aircraft, December final (-0.4% prior).

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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