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Dave & Buster's & 4 Other Restaurant Stocks to Bet On
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Based in Texas, Dave & Buster's Entertainment, Inc. (PLAY - Free Report) began trading in Oct 2014. The core concept of the restaurateur is “Eat Drink Play and Watch,” all in one location. Its menu comprises “Fun American New Gourmet” entrées and appetizers and a full selection of non-alcoholic and alcoholic beverages.
Notably, the long-term growth prospects of the company are compelling, given its strong sales, earnings growth and significant margin improvement.
Particularly, we believe that the company’s efforts to build sales and improve margins through various initiatives such as continual opening of stores, menu innovation, launch of new games and the new Fun American New Gourmet and beverage options should help the company boost its top and bottom line, going ahead.
Notably, the company has reported six quarterly results so far, exceeding expectations every time. In fact, the company has an average positive earnings surprise of 105.37% for the trailing four quarters. Meanwhile, share price of the company has soared nearly 25% in the past one year.
Moreover, analysts are quite bullish on the stock, leading to a 2.3% and 2.4% increase in the Zacks Consensus Estimate for 2016 and 2017 earnings, over the past 60 days, which now stand at $1.81 and $2.11, respectively. Additionally, for 2016, sales and EPS are likely to improve 13.1% and 19.2%, respectively, further underlining its potential.
To add to the bullish factors, Dave & Buster’s has a Zacks Rank #2 (Buy) and a Growth Style Score of ‘A.’
Back-tested results show that stocks with Growth Style Scores of ‘A’ or ‘B’ when combined a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities in the growth investing space.
Dave & Buster’s is thus an interesting option for investors right now. However, given the booming prospects of the restaurant industry, we believe that Dave & Buster’s is not the only company looking up.
What’s Driving the Restaurant Stocks?
The U.S. restaurant industry gained momentum at the start of 2016 on the back of improving consumer spending patterns, which in turn were positively influenced by rising wages and cheaper fuel. As dining out is usually directly proportional to consumers’ disposable income, restaurant sales are projected to rise further in 2016.
According to the industry forecast released by the National Restaurant Association (NRA) for 2016, sales at restaurants are projected to witness an upswing this year. The NRA estimates restaurant sales at around $782.7 billion in 2016.
Moreover, the Restaurant Performance Index (RPI) that tracks the health and outlook for the U.S. restaurant industry stood at 101.6 in April, up 0.9% from March, on the back of stronger same-store sales and customer traffic results, according to the NRA.
4 Other Winners
The rosy forecast for restaurants in 2016 is supported by the industry’s recent projections. At this juncture, adding restaurant stocks to your portfolio might be a prudent move.
Apart from Dave & Buster’s, we have picked four stocks in the restaurant industry with a top Zacks Rank and a Growth Style Score of ‘A.’
Headquartered in Syracuse, NY, Carrols Restaurant Group, Inc. (TAST - Free Report) operates through its subsidiaries and is one of the largest restaurant companies in the U.S. This Zacks Rank #1 company is the largest Burger King franchisee, based on restaurant count. The company’s astounding earnings growth coupled with significant improvement in the top line and operating margin along with innovative product introductions hold well for long-term growth.
Moreover, the company has been seeing an upward trend in earnings estimate revision. Notably, over the past 60 days, the Zacks Consensus Estimate for 2016 and 2017 earnings have increased 9.4% and 1.4% to 58 cents and 70 cents, respectively. Further, for full-year 2016, sales growth is pegged at 10.6% while EPS is expected to grow a solid 54%.
BJ's Restaurants, Inc. (BJRI - Free Report) owns and operates a chain of high-end casual dining restaurants in the U.S., which serve signature deep-dish pizzas, salads, sandwiches, burgers, pastas, steaks and hand-crafted beers. Going forward, we expect this Zacks Rank #2 company’s Project Q initiatives, menu innovation, prudent expansion initiatives, and marketing and operational initiatives to boost sales.
Also, upward estimate revisions reinstate hope on the stock’s prospects. The Zacks Consensus Estimate for 2016 and 2017 has climbed 3.1% and 2.7% to $2.06 and $2.29 per share, respectively, over the last 60 days. Further, for full-year 2016, EPS is expected to grow a healthy 22.1%, while sales growth stands at 10.8%.
Headquartered in Louisville, KY, Papa John's International Inc. (PZZA - Free Report) operates & franchises pizza delivery and carry-out restaurants under the brand Papa John's. To become the leading chain of pizza delivery restaurants in each of its targeted markets, the company has developed a strategy to enhance customer satisfaction and retention, as well as establish recognition and acceptance of the Papa John's brand. Notably, in this regard, this Zacks Rank #2 company’s focus on menu innovation, promotional offers and foray into technology bodes well.
Upward estimate revisions for 2016 and 2017 earnings add to the optimism over the stock. The Zacks Consensus Estimate for 2016 and 2017 EPS have scaled 1.7% and 0.8% to $2.40 and $2.67, respectively, over the last 60 days. Moreover, for full-year 2016 sales and EPS are projected to grow 4.1% and 14.7%, respectively.
Based in Ohio, Bob Evans Farms, Inc. owns and operates full-service restaurants that offer breakfast, lunch and dinner items. It also produces and distributes fresh, smoked and fully cooked pork sausage, ham and hickory-smoked bacon products as well as ready-to-eat items such as sandwiches.
We are positive on this Zacks Rank #2 company’s focus on quality improvement, investment optimization on labor to deliver a better experience to guests and efforts to reduce costs. What’s more, for full-year 2016, EPS is likely to grow a healthy 20.6%.
Bottom Line
Though the restaurant industry has had its share of pitfalls in the form of high labor costs, unfavorable currency, a weak Chinese economy and a tightening labor market, strong fundamentals and effective sales initiatives have kept it going. We expect the industry to sustain the momentum going ahead, allowing investors to cash in on the bountiful opportunities in the space.
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Dave & Buster's & 4 Other Restaurant Stocks to Bet On
Based in Texas, Dave & Buster's Entertainment, Inc. (PLAY - Free Report) began trading in Oct 2014. The core concept of the restaurateur is “Eat Drink Play and Watch,” all in one location. Its menu comprises “Fun American New Gourmet” entrées and appetizers and a full selection of non-alcoholic and alcoholic beverages.
Notably, the long-term growth prospects of the company are compelling, given its strong sales, earnings growth and significant margin improvement.
Particularly, we believe that the company’s efforts to build sales and improve margins through various initiatives such as continual opening of stores, menu innovation, launch of new games and the new Fun American New Gourmet and beverage options should help the company boost its top and bottom line, going ahead.
Notably, the company has reported six quarterly results so far, exceeding expectations every time. In fact, the company has an average positive earnings surprise of 105.37% for the trailing four quarters. Meanwhile, share price of the company has soared nearly 25% in the past one year.
Moreover, analysts are quite bullish on the stock, leading to a 2.3% and 2.4% increase in the Zacks Consensus Estimate for 2016 and 2017 earnings, over the past 60 days, which now stand at $1.81 and $2.11, respectively. Additionally, for 2016, sales and EPS are likely to improve 13.1% and 19.2%, respectively, further underlining its potential.
To add to the bullish factors, Dave & Buster’s has a Zacks Rank #2 (Buy) and a Growth Style Score of ‘A.’
Back-tested results show that stocks with Growth Style Scores of ‘A’ or ‘B’ when combined a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities in the growth investing space.
Dave & Buster’s is thus an interesting option for investors right now. However, given the booming prospects of the restaurant industry, we believe that Dave & Buster’s is not the only company looking up.
What’s Driving the Restaurant Stocks?
The U.S. restaurant industry gained momentum at the start of 2016 on the back of improving consumer spending patterns, which in turn were positively influenced by rising wages and cheaper fuel. As dining out is usually directly proportional to consumers’ disposable income, restaurant sales are projected to rise further in 2016.
According to the industry forecast released by the National Restaurant Association (NRA) for 2016, sales at restaurants are projected to witness an upswing this year. The NRA estimates restaurant sales at around $782.7 billion in 2016.
Moreover, the Restaurant Performance Index (RPI) that tracks the health and outlook for the U.S. restaurant industry stood at 101.6 in April, up 0.9% from March, on the back of stronger same-store sales and customer traffic results, according to the NRA.
4 Other Winners
The rosy forecast for restaurants in 2016 is supported by the industry’s recent projections. At this juncture, adding restaurant stocks to your portfolio might be a prudent move.
Apart from Dave & Buster’s, we have picked four stocks in the restaurant industry with a top Zacks Rank and a Growth Style Score of ‘A.’
Headquartered in Syracuse, NY, Carrols Restaurant Group, Inc. (TAST - Free Report) operates through its subsidiaries and is one of the largest restaurant companies in the U.S. This Zacks Rank #1 company is the largest Burger King franchisee, based on restaurant count. The company’s astounding earnings growth coupled with significant improvement in the top line and operating margin along with innovative product introductions hold well for long-term growth.
Moreover, the company has been seeing an upward trend in earnings estimate revision. Notably, over the past 60 days, the Zacks Consensus Estimate for 2016 and 2017 earnings have increased 9.4% and 1.4% to 58 cents and 70 cents, respectively. Further, for full-year 2016, sales growth is pegged at 10.6% while EPS is expected to grow a solid 54%.
BJ's Restaurants, Inc. (BJRI - Free Report) owns and operates a chain of high-end casual dining restaurants in the U.S., which serve signature deep-dish pizzas, salads, sandwiches, burgers, pastas, steaks and hand-crafted beers. Going forward, we expect this Zacks Rank #2 company’s Project Q initiatives, menu innovation, prudent expansion initiatives, and marketing and operational initiatives to boost sales.
Also, upward estimate revisions reinstate hope on the stock’s prospects. The Zacks Consensus Estimate for 2016 and 2017 has climbed 3.1% and 2.7% to $2.06 and $2.29 per share, respectively, over the last 60 days. Further, for full-year 2016, EPS is expected to grow a healthy 22.1%, while sales growth stands at 10.8%.
Headquartered in Louisville, KY, Papa John's International Inc. (PZZA - Free Report) operates & franchises pizza delivery and carry-out restaurants under the brand Papa John's. To become the leading chain of pizza delivery restaurants in each of its targeted markets, the company has developed a strategy to enhance customer satisfaction and retention, as well as establish recognition and acceptance of the Papa John's brand. Notably, in this regard, this Zacks Rank #2 company’s focus on menu innovation, promotional offers and foray into technology bodes well.
Upward estimate revisions for 2016 and 2017 earnings add to the optimism over the stock. The Zacks Consensus Estimate for 2016 and 2017 EPS have scaled 1.7% and 0.8% to $2.40 and $2.67, respectively, over the last 60 days. Moreover, for full-year 2016 sales and EPS are projected to grow 4.1% and 14.7%, respectively.
Based in Ohio, Bob Evans Farms, Inc. owns and operates full-service restaurants that offer breakfast, lunch and dinner items. It also produces and distributes fresh, smoked and fully cooked pork sausage, ham and hickory-smoked bacon products as well as ready-to-eat items such as sandwiches.
We are positive on this Zacks Rank #2 company’s focus on quality improvement, investment optimization on labor to deliver a better experience to guests and efforts to reduce costs. What’s more, for full-year 2016, EPS is likely to grow a healthy 20.6%.
Bottom Line
Though the restaurant industry has had its share of pitfalls in the form of high labor costs, unfavorable currency, a weak Chinese economy and a tightening labor market, strong fundamentals and effective sales initiatives have kept it going. We expect the industry to sustain the momentum going ahead, allowing investors to cash in on the bountiful opportunities in the space.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>