Apple (NASDAQ:AAPL): The iPhone continues to be Apple’s biggest catalyst, accounting for two thirds of its revenue in any given quarter. The phone has largely struggled in the past year due to the limited appeal of the iPhone 6s and increasing competition. However, the recent release and success of the iPhone 7 have put many of those concerns to rest. Sales of the phone have gotten off to an incredible started and now account for 43% of all iPhone sales recorded in the quarter. The phone was only available for the final two weeks of Q3, making this an even more remarkable feat. New-found optimism around the newest phone has pushed shares up 17% in the past 3 months. Prior to the launch, it was expected to be a big drag on earnings season, which may be the case if the hype isn’t reached on Tuesday.
Chipotle Mexican Grill (NYSE:CMG): In the second quarter, comparable restaurant sales decreased a 3.6% on a 16.6% decline in total revenue. In an effort to regain customers, Chipotle has hit the ground running with new promotional campaigns and marketing initiatives. Some of these include Chiptopia, which rewards customers for frequent visits throughout the summer. More recently, the company launched free kid’s meals on Sundays and complimentary beverages for students.
These new marketing initiatives are not only expected to be unsuccessful but have also come at the cost of profitability. The costs associated with running campaigns to drive sales typically put pressure on margins. Meanwhile, a broader pullback is beginning in the fast casual space with popular names like Shake Shack (NYSE:SHAK) starting to show weakness. Any external pressures will only compound Chipotle’s losses as it struggles to attract customer.
Panera Bread Company (NASDAQ:PNRA): Panera has remained resilient in spite of a broader pullback in the fast casual sector. The restaurant chain remains dedicated to improving efficiency and quality to better meet its customer's needs. This includes the recent move to only serve “clean” bacon as opposed to what is found at McDonald’s (NYSE:MCD). “Clean” simply means that food doesn’t contain artificial ingredients while also shedding some light on the standards to which Panera holds itself.
Meanwhile, the continued rollout of Panera 2.0, frequent menu innovations and new store designs have started to yield positive results. With stores now running more efficiently, we have started to see sales edge higher. However these new initiatives come at a cost to profitability. Converting every store to the new system along with renovations and rising wages certainly takes its toll on margins. On top of this, consumer spending in the U.S. continues to trend downward, putting pressure on traffic and comps for the quarter.
Pandora Media (NYSE:P): Pandora is working on several new projects that could potentially drive long-term growth. In September the company announced Pandora plus, an ad-free radio experience for $4.99 per month. The new service provides greater offline freedom than any other paid service. Also, as a part of the strategy, Pandora will undertake greater strategic acquisitions and partnerships. It most recently struck a deal with 3 major music labels that will help reduce some of the content costs. There’s no denying that Pandora is making headway at returning to profitability, but if it doesn’t happen soon, investors will continue to abandon ship.
Juniper Networks (NYSE:JNPR): Juniper is coming off a better-than-expected second quarter, reporting a beat on both the top and bottom line. While it surpassed the Estimize consensus, growth rates declined from the previous quarter. The top line showed flat growth while earnings dropped by 6%. This can be largely attributed to increasing competition, global uncertainty and waning demand for cyber-security products. Many of these aren’t specific to the second quarter and should continue to take their toll on future quarters.
To offset these losses, Juniper is restructuring some of its operations in the cloud and security space. The addition of greater efficiency controls tends to drive margins higher, but given the current state of affairs in the space, it’s doesn’t appear that these problems involve a quick fix. Wednesay’s report from Juniper -- along with FFIV and FTNT later in the week -- will set the tone for the cyber-security space this earnings season.
How do you think these names will report?