Earnings season is in full swing, with a lot of names reporting this upcoming week. We've seen many companies report pain from the economic shutdown during the second quarter. Within the releases, I'm looking for stocks that will reveal just how tough the pandemic was. Looking to the week ahead, pay attention to these stocks.
A big portion of Disney's (NYSE: DIS) business has been exposed to the ramifications of social distancing. Its theme parks are a big revenue creator, and their shutdown and closure undoubtedly had a tumultuous effect on earnings. It's simply a tough environment for a company that has to bring in consumers to social areas like amusement parks.
The company's fiscal second quarter, ended March 28, showed an 85% decline in income from continuing operations. Diluted earnings per share from continuing operations declined 93% to $0.26. When you take into account that the shutdown impacted the second three months of 2020 far more than the first three, Disney is primed to provide another wild earnings release.
On the flip side of this equation, Disney has a massive streaming network with Disney+, Hulu, and the newly integrated content library of Twentieth Century Fox. The cooped up effects of social distancing could help lead consumers to these products en mass.
Estimates are calling for a loss of $0.43, which would mark a 26.54% decline. The company is set to report August 4.
Gyms are another business that certainly isn't set up for a pandemic. It is going to be very interesting to see how a company like Planet Fitness (NYSE: PLNT) fares in a world that is so engrossed in social distancing.
Over the last five years, we've watched Planet Fitness put together rockstar revenue gains. Since 2015, the company has had double-digit revenue growth annually, with comparable double-digit rises in net income. With a sudden 14.5% drop in year-over-year revenues in the first quarter, coupled with a 68.5% decrease in net incomes, Planet Fitness has been one of the harder hit companies during the pandemic.
Rather than focusing on the quarterly declines in sales and earnings, I'm more interested in hearing what the corporate prognosis is for the second half of the year. Planet Fitness recently announced that it will require masks at its gyms from August onward. That is a pretty good repellant for even the most valiant of gym rats.
Reporting Aug. 4, estimates are calling for a loss of $0.17 per share.
Penn National Gaming
Reporting Aug. 6, Penn National Gaming (NASDAQ: PENN) is definitely one of the more popular names releasing its earnings in August. Sports betting is ridiculously popular right now, and perhaps even more popular is the Barstool Sports brand. With Penn National acquiring a 36% stake in Barstool, it has cemented its name in the broader scheme of legalized sports betting. Coupled with its already strong casino and horse track infrastructure, Penn National should have been a shoo-in for many portfolios. Then came COVID-19. It put the tail end of the NHL, opening day of MLB, The Masters, and the NFL season all in disarray. Subsequently, Penn National reported a $608.8 million loss in the first quarter.
With casinos having been shuttered, and race tracks empty through the first half of the year, Penn National certainly didn't have the Q2 that it wanted either. With a Barstool branded sportsbook in the works, this one is all about the future. The stock hit below $4 near the onset of the pandemic, and it goes without saying that the rebound has surely decimated the hearts of many looking to invest who missed the comeback.
The company seems stable, and the important things to watch will be commentary on how Penn National plans to handle casino traffic for the second half of the year, as well as the timeline for the launch of a Barstool online sportsbook. Operations have resumed at 31 out of 41 Penn National Properties. For the time being, that should give Penn National some degree of normalcy.
Estimates are calling for a loss of $2.08 per share.
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David Butler has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Planet Fitness and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.
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