Earnings: Hertz sees demand recovery, Southwest reports mixed results, Domino’s Pizza misses

Yahoo Finance Live breaks down several of today's top trending business stories.

Video Transcript

RACHELLE AKUFFO: Welcome back, everyone. It is time for our triple play. Let's take a look at the tickers making a mark today. My pick today is Hertz, ticker symbol, HTZ. Hertz is correct because I mean, today, as we're seeing the stock price there, down more than 7%. Now the rental car company really hasn't found its feet ever since the COVID pandemic started, but it did see a late surge in the first quarter with earnings. And that helped with a more than 40% surge in Q1 revenue from the year prior to $1.81 billion. Now that beat estimates by $50 million.

Now CEO Stephen Scherr said, looking ahead, we do not see demand for our services lessening any time soon. And in fact, all indications point to an extremely busy summer. Our key partnerships with Uber, Tesla, and Polestar are also expected to pay off later this year, but of course, constraints on the supply of new vehicles, inflationary cost pressures, they're making it hard to source a new fleet to meet that demand, something the CEO expects will persist into 2023.

On a different note, another strange issue that Hertz is facing is renters getting pulled over, and in some cases, arrested because the cars are falsely getting flagged as being reported as stolen. About 300 allegations are so far expected to play out in federal court. Hertz says it is working on a solution.

BRAD SMITH: Yeah, first, coming back to the demand here, because I think that's something, especially when we do see some corporate travel come back, Hertz one of the major beneficiaries there we do know historically. And so we'll see exactly what that leisure renter does look like in the near term, and then even going forward from here, where that corporate travel, as we are discussing even some of the other parts of the travel capacity in a moment here when I get to my triple play, where that starts to come back, how that also helps out Hertz, and not so much when Lambo, but when Tesla.

When are some of those Teslas are going to start to get to-- when are they going to start get delivered-- start getting delivered, excuse me. And ultimately, what type of boom does that have for the number of people who were just interested in making sure that they're renting from a company that does have a Tesla type option to rent? And so I think that's one of the major things that we're going to have to keep watching with Hertz.

And then especially on the lawsuits that you were mentioning, that is absolutely scary if you are a driver in this situation. And you just get some type of notification that you're getting sued for theft when, actually, you turned it in already. You should be good. And so that's something that they've clearly got to work out. And we'll see exactly where this legal case moves forward from here.

But since I mentioned that we're staying in the transportation space, we'll go to the air, if you will, for a hot second. Southwest Airlines reported earnings results for the first quarter. Revenue that beat estimates came in at $4.7 billion. But the company did report a loss for the quarter of $278 million that equates to a loss of $0.47 per share. The story for the quarter, it was kind of similar to what we've heard from other airlines, that the Omicron variant during January and February, it was detrimental to demand, but in March, the airline operator resumed profitability.

Southwest CEO Bobby Jordan said in a statement, based on current plans and expected continued strong bookings, we continue to expect to be solidly profitable for the remaining three quarters of this year and for the full year 2022. But Dave, this is something similarly that we heard from Delta just a few weeks back as well.

DAVE BRIGGS: Yeah, what's fascinating about the read into Southwest is they're going to fly less next quarter and make more money and make more money than the corresponding quarter in 2019. They're cutting their flight schedule by 7% in June. So what we're learning? People are paying the increased prices in airfare, up 23.6% in the month of March. So people are tolerant of the price increases in the skies. They are continuing to fly, and Southwest is benefiting from that. They'll cut 10% of their flights in Denver, my home city, which is a dramatic--

BRAD SMITH: Wow.

DAVE BRIGGS: --cutback. All right, my pick is Domino's Pizza, DPZ. They missed quarterly estimates today, based largely on staffing shortages, and of course, inflation. We've heard a lot about that, in particular, in the food sector. They offered $3 discount to all their customers if they pick up their own orders. That was to combat against the labor shortage. It didn't ultimately help them. Said their CEO, quote, "2022 shaping up to be a challenging year." That was from Richard Allison.

And that will not be his problem from now on because he is retiring. COO Russell Weiner now takes over starting May 1 next week. So he's got the very big challenge of taking over after a rough quarter. Overall, sales same store up nearly 10% last year. Same store sales down 3.6%. Let's check on the stock. It is down 35% year to date. And on the day right now, it has fallen 3 and 1/2%. Love me some Domino's Pizza, but they've got a lot of challenges at the moment, guys.

RACHELLE AKUFFO: And it's interesting because yesterday, when we were talking about lobster prices, we see that the CEO of Red Lobster also stepped down, also trying to face some of these challenges with some of these high prices and labor shortages. So this is clearly something, no matter which end of the spectrum that you're at, whether it's the fast food or some of these family restaurants, that they're really having to deal with. Unfortunately, we're seeing the staff don't seem to be coming back. And no matter what sort of incentives that we're seeing a lot of these companies roll out like college tuition, people just need more in order to come back to some of these people-facing jobs.

BRAD SMITH: Of course, one of the popular things that pizza was able to do so well was delivery. Now that you have so many different delivery services that people can tap into, it's not so much about what they had done in the past, but what have you done for me lately. And that, for the consumer, has meant so many different abilities to gather rewards now.

Let's give Domino's some credit here because they were one of the first innovators to really tie in that technological experience, leveraging the internet to their advantage, leveraging even Twitter early days to allow people to place orders through Twitter. I remember those days. I didn't do it, but I remember it, at least.

But I think for Domino's and some of the other pizza chains, especially as so many people, consumers, are looking towards some of their own homegrown pizza shops to figure out where they can also support some of these small and local businesses. That's where some of the other options come into play. The Uber Eats has come into play. That's also where some of the Caviars of the world come into play. So I think that's something particularly to keep watching from this point forward. But for Domino's, what we've seen recently, I mean, it's still going to come down to what can they do menu innovation wise as well?

DAVE BRIGGS: Not much, not much. But the app, you're right, is really innovative and very helpful. I use it quite often. The other theory that analysts have about, in particular, pizza right now, it was up 10% in the pandemic. And the theory by analysts is that we've grown tired of ordering in, and in particular, ordering in pizza, because we just had so much of it in those couple of years stuck home. And they think that the return to restaurants, we're going to want to go dine in. And that just doesn't-- pizza is not what you do. You don't go dine in. You go have just about anything else. It is simply a takeout food.

BRAD SMITH: Unless you go to Emily's in Brooklyn. I would recommend that one for sure.

DAVE BRIGGS: Is that right? I never go out for pizza.

BRAD SMITH: Oh, they got a good pizza and good burger there.