Top Performer for Tues: O'Charley's (CHUX)

There are 6 companies from the retail-restaurants industry on today's 223-stock Zacks #1 Rank List, and O'Charley's Inc. (CHUX - Snapshot Report) is leading the way with a gain of approximately 5%. That gain is more than enough to make this multi-concept restaurant company a top-performing Zacks #1 Rank stock during what looks to be a very sluggish session for the market.

The other 5 companies from this industry on the list are Bob Evans Farms, Inc. (BOBE - Snapshot Report), Cracker Barrel Old Country Store, Inc. (CBRL - Snapshot Report), DineEquity, Inc. (DIN - Snapshot Report), Ruth's Hospitality Group, Inc. (RUTH - Snapshot Report) and The Steak n Shake Company (SNS - Snapshot Report).

Earnings Estimates

Two months ago, analysts were expecting CHUX to lose 20 cents per share for this year. However, the expectation is for a profit of 37 cents nowadays, marking a dramatic turnaround of 57 cents. The 4 covering analysts have made no moves in the past month, however.

Analysts weren't expecting a loss 2 months ago for the year ending December 2010, but that didn't keep the outlook for having its own sharp rise. CHUX is now expected to earn 49 cents per share next year, which is nearly 400% better than the dime expectation from 60 days ago.

At the moment, analysts predict profit growth of 32% for next year over this year.

First-Quarter Report

It's easy to figure out why casual dining restaurants would be under heavy pressure during difficult economic times. With less money to throw around, consumers decide to eat at home rather than go out. Furthermore, even when they do go out, they tend to spend less money that usual.

CHUX certainly had to deal with this environment during its first quarter, but was still able to report earnings per share of 35 cents. That result easily eclipsed the consensus of a penny loss by as much as 3600%.

Revenue declined by 2% to $291.7 million, versus $297.5 million a year earlier, which was also ahead of expectations. Same-store sales slipped 2.9% at O'Charley's company-operated restaurants, as well as 4.5% at Ninety Nine Restaurants and 17.2% at Stoney River Legendary Steaks.

In Other News...

More recently, on Jun 15, CHUX announced an agreement with Reinhart FoodService, L.L.C. to outsource food and supply distribution for Ninety Nine Restaurants. Also in the agreement, the company will sell related assets at its distribution facility in Bellingham, Massachusetts.

CHUX expects the transactions to reduce its investment in non-restaurant assets and reduce its ongoing expenses.