It took three and a half years, but the pandemic’s economic impact is finally history. Domino’s Pizza (DPZ.N), Walgreens Boots Alliance (WBA.O), and Delta Air Lines (DAL.N), which all saw significant swings in revenue and profit as a result of Covid-19, reported on Thursday that life is returning to normal, for better or worse.
It’s even worse at Domino’s. Revenue at the pizza delivery company fell about 4% from the same period last year, as restaurants in the United States sold fewer pizzas. Meanwhile, Walgreens lost $180 million in the third quarter, citing significantly lower revenue from Covid tests and vaccines. During the pandemic, both stocks rose dramatically. According to LSEG data, both are now trading at lower profit multiples than they were at the end of 2019. They are trading at 23 times and 6 times forward earnings, respectively.
Meanwhile, Delta delivered record revenue for the quarter, with 30% year-on-year earnings growth, and is rapidly repaying debt incurred during the 2020 chaos. Its valuation is roughly the same as it was before the pandemic, at around 5 times estimated EBITDA for the coming year. Revenue from international passenger travel, which was set to nearly halt in 2020, increased by 35%.
The era of yearly comparisons with Covid distortions is coming to an end. Vaccinations were already significantly lower at Walgreens by the end of 2022, so the next quarter may appear relatively stable. According to government data, air passengers last December were only 4% lower than in 2019. While there is no room for complacency in terms of future shocks, third-quarter earnings may serve as a bookend to a strange, turbulent period. (Cyran, Robert)
Reference :
Covid exits corporate earnings with a bump. (2023, October 13). Reuters. https://www.reuters.com/breakingviews/covid-exits-corporate-earnings-with-bump-2023-10-12/