These 2 Consumer Stocks Are Soaring
KEY POINTS: GAP AND SWEETGREEN STOCKS UP
- Gap stock (NYSE:GPS) was up as shareholders bought in to a key piece of news.
- As diners embrace healthy eating, investors bought up Sweetgreen stock (NYSE:SG).
During after hours trading Thursday, a few consumer sector firms released financial results. Unquestionably, two companies caught our eye. First up we’ll tell you why Gap stock was up. Second we’ll answer the question “why is Sweetgrass stock up?”
All in all, Thursday was a bad day on Wall Street as investors continued to weigh global uncertainties. By the end of the day, the Nasdaq Composite (^IXIC) had a substantial drop, while the Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) saw more modest losses. Nevertheless Gap stock was up, and Sweetgrass stock rose too — here’s why.
Gap bounces back
The retail giant Gap’s shares were up 7% ahead of the report. The firm’s fourth-quarter financial report showed that it has effectively recovered from the disruptions caused by the COVID-19 pandemic, although it still faces some issues.
Gap had mixed results. Revenue increased 2% year over year in the fourth quarter, returning to within 3% of fourth quarter 2019 sales, before the pandemic began. However, Gap had a modest loss of $16 million, or $0.04 per share, reversing a large profit from the year earlier period.
Although full-year financial results for 2020 were more encouraging, they weren’t great. Revenue was up 21% year over year and was about 2% greater than in 2019, and full-year earnings of $0.67 per share provided investors good news after a larger loss in fiscal 2020.
Best of all, according to Gap, prospects for 2022 are excellent. Full-year sales are expected to rise by low single-digit percentages. However, full-year earnings of $1.85 to $2.05 per share may be triple what the company projected. That’s the path that Gap shareholders want to see the company take. That explains why Gap stock was up after hours Thursday evening.
Sweetgreen shares, on the other hand, rose by almost 20% after hours on Thursday evening. The salad-serving fast-casual restaurant chain posted strong results in fiscal fourth quarter.
Sweetgreen’s numbers revealed the company’s growth. Revenue for the quarter was up 63 % to $96.4 million, with same-store sales increasing 36%. Average unit volumes at restaurants that have been open over a year were up from $2.2 million last year to $2.6 million in the most recent quarter. While restaurant-level profit became positive, total net losses increased by more than half compared to the prior-year period.
Sweetgreen’s full-year results also mirrored these trends. Revenue increased 54%, with comparable-store sales up 25%. However, net losses widened by around 10% from 2020.
Sweetgreen projects opening least 35 new locations in fiscal 2022, with revenue of between $515 million and $535 million. This is similar to the direction of healthy eating, which investors appear to be embracing. And it’s also why Sweetgreen stock was up after hours.
Originally published at https://www.mrktwire.com on March 4, 2022.
