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Restaurant Stock Earnings Slated for Aug 10: WEN, SHAK, GTIM
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As the curtains are about to fall on the Q2 earnings season, let’s take a look at how the widely popular restaurant stocks have fared so far.
The restaurant industry belongs to the broader Retail-Wholesale sector and has not fared well this earnings season relative to the recent past. Notably, per our latest earnings preview article, as of Aug 5, 50% of the retail companies in the S&P 500 index have reported their results and the beat ratios for this sector have not been impressive (45.5% for earnings and 18.2% for revenues).
Thus, in spite of the high expectations for the group, most of the stocks reported below-par figures as they mainly struggled with the top line.
Limited revenue growth has hurt the performance of major players in the space like McDonald's Corp. (MCD - Free Report) , Chipotle Mexican Grill, Inc. (CMG - Free Report) , Starbucks Corporation (SBUX - Free Report) , Dunkin' Brands Group, Inc. and others.
Meanwhile, a few restaurant companies are set to report their quarterly numbers on Aug 10. Let’s take a look at what might be in store for them this quarter:
The Wendy's Company (WEN - Free Report) posted a positive earnings surprise of 83.33% last quarter. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 23.45%.
However, our proven model shows that an earnings beat is uncertain for Wendy’s this time around. This is because, according to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase its odds of an earnings surprise.
For the second quarter of 2016, the company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). The combination makes an earnings beat unlikely. As it is, we caution against Sell-rated stocks going into the earnings announcement. Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at 9 cents.
Though the company’s bottom line has improved due to its cost-saving initiatives, reduction in the number of company-operated restaurants has been hurting the top line. We expect the trend to continue in Q2 (read more: What's in Store for Wendy's this Earnings Season?).
Shake Shack Inc. (SHAK - Free Report) recorded a positive earnings surprise of 33.33% last quarter. Moreover, the company’s earnings outpaced the Zacks Consensus Estimate in all of the last four quarters, with an impressive average beat of 71.43%.
The company has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold), making it difficult to conclusively predict an earnings beat this quarter. Meanwhile, the Zacks Consensus Estimate for the second-quarter’s earnings is pegged at 13 cents.
Menu expansion and innovation, increased traffic coupled with limited time offerings are expected to boost comps. However, elevated labor and pre-opening costs might hurt the quarters’ profits and margins (read more: Can Shake Shack Spring a Surprise in Q2 Earnings?).
Good Times Restaurants Inc. (GTIM - Free Report) registered a 28.57% positive earnings surprise in the previous quarter. Moreover, the trailing four-quarter average earnings surprise stands at a positive 5.36%.
For third-quarter fiscal 2016, the company has an Earnings ESP of -200.00% which when combined with a Zacks Rank #3, makes surprise prediction difficult. Meanwhile, the Zacks Consensus Estimate for the quarter’s bottom line is pegged at a penny per share.
Don’t miss out on our full earnings release articles for these stocks, as the actual results might hold some surprises!
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Restaurant Stock Earnings Slated for Aug 10: WEN, SHAK, GTIM
As the curtains are about to fall on the Q2 earnings season, let’s take a look at how the widely popular restaurant stocks have fared so far.
The restaurant industry belongs to the broader Retail-Wholesale sector and has not fared well this earnings season relative to the recent past. Notably, per our latest earnings preview article, as of Aug 5, 50% of the retail companies in the S&P 500 index have reported their results and the beat ratios for this sector have not been impressive (45.5% for earnings and 18.2% for revenues).
Thus, in spite of the high expectations for the group, most of the stocks reported below-par figures as they mainly struggled with the top line.
Limited revenue growth has hurt the performance of major players in the space like McDonald's Corp. (MCD - Free Report) , Chipotle Mexican Grill, Inc. (CMG - Free Report) , Starbucks Corporation (SBUX - Free Report) , Dunkin' Brands Group, Inc. and others.
Meanwhile, a few restaurant companies are set to report their quarterly numbers on Aug 10. Let’s take a look at what might be in store for them this quarter:
The Wendy's Company (WEN - Free Report) posted a positive earnings surprise of 83.33% last quarter. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 23.45%.
WENDYS CO/THE Price and EPS Surprise
WENDYS CO/THE Price and EPS Surprise | WENDYS CO/THE Quote
However, our proven model shows that an earnings beat is uncertain for Wendy’s this time around. This is because, according to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase its odds of an earnings surprise.
For the second quarter of 2016, the company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). The combination makes an earnings beat unlikely. As it is, we caution against Sell-rated stocks going into the earnings announcement. Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at 9 cents.
Though the company’s bottom line has improved due to its cost-saving initiatives, reduction in the number of company-operated restaurants has been hurting the top line. We expect the trend to continue in Q2 (read more: What's in Store for Wendy's this Earnings Season?).
Shake Shack Inc. (SHAK - Free Report) recorded a positive earnings surprise of 33.33% last quarter. Moreover, the company’s earnings outpaced the Zacks Consensus Estimate in all of the last four quarters, with an impressive average beat of 71.43%.
SHAKE SHACK INC Price and EPS Surprise
SHAKE SHACK INC Price and EPS Surprise | SHAKE SHACK INC Quote
The company has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold), making it difficult to conclusively predict an earnings beat this quarter. Meanwhile, the Zacks Consensus Estimate for the second-quarter’s earnings is pegged at 13 cents.
Menu expansion and innovation, increased traffic coupled with limited time offerings are expected to boost comps. However, elevated labor and pre-opening costs might hurt the quarters’ profits and margins (read more: Can Shake Shack Spring a Surprise in Q2 Earnings?).
Good Times Restaurants Inc. (GTIM - Free Report) registered a 28.57% positive earnings surprise in the previous quarter. Moreover, the trailing four-quarter average earnings surprise stands at a positive 5.36%.
GOOD TIMES REST Price and EPS Surprise
GOOD TIMES REST Price and EPS Surprise | GOOD TIMES REST Quote
For third-quarter fiscal 2016, the company has an Earnings ESP of -200.00% which when combined with a Zacks Rank #3, makes surprise prediction difficult. Meanwhile, the Zacks Consensus Estimate for the quarter’s bottom line is pegged at a penny per share.
Don’t miss out on our full earnings release articles for these stocks, as the actual results might hold some surprises!
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 >>