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SHAK, JACK, and RRGB: How Burger Stocks Performed This Earnings Season
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Within the restaurant sector are three notable burger stocks that have already reported their quarterly results this earnings season. Who stood out on top, and do they make for viable investment candidates? Let’s take a look at how Shake Shack (SHAK - Free Report) , Jack In The Box (JACK - Free Report) Red Robin (RRGB - Free Report) performed over the past quarter.
Shake Shack released its second quarter earnings report yesterday, and shares have fallen by about 7% since then. The company beat our EPS (earnings per share) consensus estimate by $0.01, posting earnings of $0.14 per share. The burger chain also surpassed sales estimates of $63 million, actually posting revenues of $66.472 million. Revenues guidance also improved, with 2016 sales forecasted to end up between $253 million and $256 million, up from previous guidance calling for revenues from $245 million-$249 million.
After posting better guidance in addition to beating expectations on the top and bottom line, why did the stock take a 9% beating just after the report was released? Well, investors weren’t too happy with the fact that same store sales growth had declined by a wide margin compared to last year. SHAK posted growth of 4.5%, which is a drastic decline compared to 12.9% same store revenues growth achieved in the same quarter last year. Earning the business of more customers from existing stores is a must, especially for a stock expected to compete strongly with other restaurants. The stock’s forward price-to-earnings valuation of 92 is proof of this. If there is a silver lining to take away from the report, it’s the fact that operating margins have improved compared to last year, going from 12.9% to 13.4%. Shake Shack is a Zacks Rank #3 (Hold).
Jack In The Box reported its third quarter earnings on the third of August, and it wooed investors with beats on the sales and earnings front. The company posted sales of $369 million, beating our estimate by $2 million. JACK also had EPS of $1.07 for the quarter, topping our earnings estimate ($0.87) by 22.99%. It should be noted that Jack In The Box also owns Qdoba, the fast casual restaurant chain serving Mexican-style cuisine. For the fourth quarter, the company forecasts Qdoba same store sales growing by 1-2% compared to 6.1% last year. Jack In The Box restaurants are also forecasted to see 1-2% same store sales growth, compared to 4.1% in the fourth quarter last year. For the company, operating margins are forecasted to come in at 20-20.5% for fiscal 2016.
Comparable store sales for company owned Jack In The Box restaurants fell by 0.2%, compared to growth of 5.5% experienced in the same quarter last year. System same store sales increased by 1.1% for the quarter, compared to 7.3% growth from the third quarter last year. Operating margins were similar to last year’s and came in at close to 22% over the quarter. Since reporting its earnings, shares have gained 13% in value. JACK is currently a Zacks Rank #2 (Buy).
On the 8th of August, Red Robin released the results of its second quarter. Sales came in at $305.5 million, and while this represents an increase of 4.3% over comparable quarters, revenues came in below expectations of $313 million by 2.27%. The company missed on the bottom line EPS estimate of $0.79 as well, posting earnings of $0.75 per share. This represents a miss of 5.06%.
Restaurant-level operating profit margins came in at 20.9% for the quarter, down from margins of 22.5% in the second quarter last year. Comparable restaurant revenues decreased as well, contracting by 3.2% using constant currency rates. Guidance has been cut in most categories, with revenues predicted to grow by 5% when previous guidance expected 8% growth. In 2016, RRGB previously expected flat to slightly negative growth for comparable restaurant sales, but it now forecasts a decrease of 2%. Red Robin expects restaurant-level operating margins of 21% this year. In spite of the misses and lowered guidance, shares are up over 8% since the earnings release. Perhaps some of the gains can be attributed towards the fact that six-year CEO Steve Carley is stepping down and will now be replaced by Denny Marie Post. RRGB stock is currently a Zacks Rank #4 (Sell).
Who Comes Out On Top?
It probably comes as no surprise that Jack In The Box is probably the better stock to own among these three burger stocks. It posts consistently high operating profits, and it has diversified revenue sources since it operates two distinctly separate restaurant chains. Shake Shack looks like it is overvalued, and since its growth has slowed down significantly, investors will probably start to be more speculative on its ability to meet long term expectations. Red Robin shares have performed better since releasing earnings, but their revised guidance could stand to hurt earnings estimates for the next quarter.
Jack In The Box probably gets first place in this list, but all of these stocks are seeing signs of slowing growth in one form or another. The restaurant space is growing increasingly competitive, and the results above may suggest that consumers are exploring food options that don’t involve restaurants built around the idea of selling juicy burgers. If you are looking to cap in some high-flying stock gains in the restaurant space, then you may want to check out this restaurant IPO report to explore various companies with high growth expectations.
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SHAK, JACK, and RRGB: How Burger Stocks Performed This Earnings Season
Within the restaurant sector are three notable burger stocks that have already reported their quarterly results this earnings season. Who stood out on top, and do they make for viable investment candidates? Let’s take a look at how Shake Shack (SHAK - Free Report) , Jack In The Box (JACK - Free Report) Red Robin (RRGB - Free Report) performed over the past quarter.
Shake Shack Inc-(SHAK - Free Report)
Shake Shack released its second quarter earnings report yesterday, and shares have fallen by about 7% since then. The company beat our EPS (earnings per share) consensus estimate by $0.01, posting earnings of $0.14 per share. The burger chain also surpassed sales estimates of $63 million, actually posting revenues of $66.472 million. Revenues guidance also improved, with 2016 sales forecasted to end up between $253 million and $256 million, up from previous guidance calling for revenues from $245 million-$249 million.
After posting better guidance in addition to beating expectations on the top and bottom line, why did the stock take a 9% beating just after the report was released? Well, investors weren’t too happy with the fact that same store sales growth had declined by a wide margin compared to last year. SHAK posted growth of 4.5%, which is a drastic decline compared to 12.9% same store revenues growth achieved in the same quarter last year. Earning the business of more customers from existing stores is a must, especially for a stock expected to compete strongly with other restaurants. The stock’s forward price-to-earnings valuation of 92 is proof of this. If there is a silver lining to take away from the report, it’s the fact that operating margins have improved compared to last year, going from 12.9% to 13.4%. Shake Shack is a Zacks Rank #3 (Hold).
Jack In The Box Inc-(JACK - Free Report)
Jack In The Box reported its third quarter earnings on the third of August, and it wooed investors with beats on the sales and earnings front. The company posted sales of $369 million, beating our estimate by $2 million. JACK also had EPS of $1.07 for the quarter, topping our earnings estimate ($0.87) by 22.99%. It should be noted that Jack In The Box also owns Qdoba, the fast casual restaurant chain serving Mexican-style cuisine. For the fourth quarter, the company forecasts Qdoba same store sales growing by 1-2% compared to 6.1% last year. Jack In The Box restaurants are also forecasted to see 1-2% same store sales growth, compared to 4.1% in the fourth quarter last year. For the company, operating margins are forecasted to come in at 20-20.5% for fiscal 2016.
Comparable store sales for company owned Jack In The Box restaurants fell by 0.2%, compared to growth of 5.5% experienced in the same quarter last year. System same store sales increased by 1.1% for the quarter, compared to 7.3% growth from the third quarter last year. Operating margins were similar to last year’s and came in at close to 22% over the quarter. Since reporting its earnings, shares have gained 13% in value. JACK is currently a Zacks Rank #2 (Buy).
Red Robin Gourmet Burgers Inc-(RRGB - Free Report)
On the 8th of August, Red Robin released the results of its second quarter. Sales came in at $305.5 million, and while this represents an increase of 4.3% over comparable quarters, revenues came in below expectations of $313 million by 2.27%. The company missed on the bottom line EPS estimate of $0.79 as well, posting earnings of $0.75 per share. This represents a miss of 5.06%.
Restaurant-level operating profit margins came in at 20.9% for the quarter, down from margins of 22.5% in the second quarter last year. Comparable restaurant revenues decreased as well, contracting by 3.2% using constant currency rates. Guidance has been cut in most categories, with revenues predicted to grow by 5% when previous guidance expected 8% growth. In 2016, RRGB previously expected flat to slightly negative growth for comparable restaurant sales, but it now forecasts a decrease of 2%. Red Robin expects restaurant-level operating margins of 21% this year. In spite of the misses and lowered guidance, shares are up over 8% since the earnings release. Perhaps some of the gains can be attributed towards the fact that six-year CEO Steve Carley is stepping down and will now be replaced by Denny Marie Post. RRGB stock is currently a Zacks Rank #4 (Sell).
Who Comes Out On Top?
It probably comes as no surprise that Jack In The Box is probably the better stock to own among these three burger stocks. It posts consistently high operating profits, and it has diversified revenue sources since it operates two distinctly separate restaurant chains. Shake Shack looks like it is overvalued, and since its growth has slowed down significantly, investors will probably start to be more speculative on its ability to meet long term expectations. Red Robin shares have performed better since releasing earnings, but their revised guidance could stand to hurt earnings estimates for the next quarter.
Jack In The Box probably gets first place in this list, but all of these stocks are seeing signs of slowing growth in one form or another. The restaurant space is growing increasingly competitive, and the results above may suggest that consumers are exploring food options that don’t involve restaurants built around the idea of selling juicy burgers. If you are looking to cap in some high-flying stock gains in the restaurant space, then you may want to check out this restaurant IPO report to explore various companies with high growth expectations.
The rank is a truly marvelous trading tool. Our ranking system has beaten the S&P 500, yielding an average return of 25% per year for the last 29 years! 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 >>