A Massive Bank Merger & This Week's Top Earnings News

On today’s episode of the Zacks Friday Finish Line, Associate Stock Strategist Ryan McQueeney and Editor Maddy Johnson discuss this week’s blockbuster bank merger and recap earnings results from Alphabet, Disney, Twitter, and Chipotle.

Make sure to subscribe and leave the show a rating on Apple (NASDAQ:AAPL) Podcasts!

The week was packed with earnings news, but a major deal in the finance sector threatened to overshadow everything else. BB&T Corporation (NYSE:BBT) and SunTrust (NYSE:STI) , two of the country’s largest regional banks, announced that they would be combining in an all-stock, nearly 50/50 merger valued at $66 billion.

If the deal goes through, it would create the 6^th largest financial institution in the United States. BB&T shareholders would technically retain majority ownership, but to underscore the “merger of equals” nature of the agreement, the new company will be renamed and its board of directors will be split evenly.

In earnings news, Wall Street this week saw fresh reports from Alphabet (NASDAQ:GOOGL) , Disney (NYSE:DIS) , Twitter (NYSE:TWTR) , Chipotle (NYSE:CMG) , and more!

Alphabet’s headline reads were positive, with adjusted earnings of $12.77 per share and revenue, excluding TAC, of $31.8 billion beating their respective Zacks Consensus Estimates of $11.08 and $31.2 billion. However, investors expressed concerns about the Google parent’s rampant spending in the quarter, despite management’s assurances that investing in the cloud and hardware businesses was necessary.

Media behemoth Disney also posted better-than-expected earnings and revenue. Disney doubled its total ESPN+ subscriptions and reported strong revenue growth in its direct-to-consumer business. However, that key growth segment remained in the red amid costly investments in the upcoming launch of Disney+.

Twitter was another example of a “double beat” report that was scrutinized beyond its earnings and revenue results. Looking past those figures, investors were skeptical about Twitter’s decision to move away from reporting MAUs—which have declined this year—to focus on “monetizable” DAUs. Twitter also posted relatively muted revenue guidance for the first quarter, sending its share sharply lower.

Chipotle, on the other hand, surged after its report. The fast casual Mexican chain saw comps growth of 6.1% in the quarter, with menu price increases lifting headline data and improving its restaurant-level operating margin by 210 basis points. Chipotle expects that comps momentum to continue, and investors were impressed by the new management team’s outlook.

Quick announcement: this is actually the final episode of the Zacks Friday Finish Line. Ryan, the long-time cohost of the show, is moving on to a new opportunity. Thank you for listening over the years!

Make sure to check out all of our other audio content at zacks.com/podcasts, and remember to subscribe and leave the feed a rating on Apple Podcasts.

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