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Restaurant Stocks Earnings Lineup for Oct 25: CMG, PNRA, EAT
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The third-quarter reporting cycle has kept investors glued to earnings releases in the lookout for companies that are poised to beat. The results so far have been encouraging, with companies recording better earnings and revenue growth than in the past few quarters.
The Q3 earnings season is thus on track to be the first quarter to move into the positive territory, following five back-to-back quarters of declines for the S&P 500 Index. In fact, the latest Earnings Preview report projects a 0.1% year-over-year increase in third-quarter earnings with revenues likely to clock 1.5% growth.
Restaurant Stocks in Focus
The restaurant industry belongs to the broader Retail-Wholesale sector and the space is expected to fare well this earnings season.
We note that the overall Q3 earnings for the sector are expected to be up 5.6% year over year on a revenue increase of 5.3%. Notably, during the second quarter, the sector had witnessed an improvement of 4.4% and 4.6% in earnings and revenues, respectively.
However, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps, thereby limiting top-line growth of the restaurateurs.
Three restaurant companies are set to report their quarterly numbers on Oct 25. Will these companies manage to put up a decent performance? Let’s take a look at what might be in store for them this quarter:
Chipotle Mexican Grill, Inc. (CMG - Free Report) posted a negative earnings surprise of 11.22% last quarter. However, the trailing four-quarter average earnings surprise is a positive 5.50%.
Notably, our proven model shows that an earnings beat is uncertain for Chipotle in the third quarter. This is because, according to our quantitative model, a company needs the right combination of the 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 third quarter of 2016, the company has an Earnings ESP of -5.52% and a Zacks Rank #4 (Sell), making it difficult to conclusively predict a beat. Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.63.
Despite various food-safety initiatives, Chipotle’s top- and bottom-line performance continues to suffer from the negative publicity surrounding the E. coli and norovirus outbreaks. We do not expect any significant improvement in Q3. However, the company’s temporary loyalty program, Chiptopia, might somewhat drive increased traffic and transactions (read more: Can Chipotle Pull Off a Surprise in Q3 Earnings?).
Panera Bread Company recorded a positive earnings surprise of 1.71% last quarter. In fact, the company posted positive earnings surprises in each of the past four quarters, with an average beat of 3.02%.
We note that Panera is unlikely to post a beat in third-quarter 2016 due to the combination of its Earnings ESP of +0.75% and Zacks Rank #4. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.34.
The company’s Panera 2.0 program, menu innovation, promotional strategies and new store design have been driving sales. We expect the trend to continue in Q3. However, high costs might impact profitability while a muted consumer spending environment in the U.S. restaurant industry might hurt comps (read more: What's in Store for Panera Bread in Q3 Earnings?).
Brinker International, Inc. (EAT - Free Report) registered a 0.81% positive earnings surprise in the previous quarter. In fact, the company surpassed the Zacks Consensus Estimate in each of the trailing for quarters, with an average beat of 1.91%.
The Zacks Consensus Estimate for the quarter’s bottom line is pegged at 55 cents. Declining traffic trends at its restaurants might hurt the company’s comps and thereby sales. However, aggressive expansion strategies and sales building initiatives, like menu innovation and promotional offerings, should somewhat boost comps.
Stay tuned! Check back on our full write-up on earnings releases of these stocks.
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Restaurant Stocks Earnings Lineup for Oct 25: CMG, PNRA, EAT
The third-quarter reporting cycle has kept investors glued to earnings releases in the lookout for companies that are poised to beat. The results so far have been encouraging, with companies recording better earnings and revenue growth than in the past few quarters.
The Q3 earnings season is thus on track to be the first quarter to move into the positive territory, following five back-to-back quarters of declines for the S&P 500 Index. In fact, the latest Earnings Preview report projects a 0.1% year-over-year increase in third-quarter earnings with revenues likely to clock 1.5% growth.
Restaurant Stocks in Focus
The restaurant industry belongs to the broader Retail-Wholesale sector and the space is expected to fare well this earnings season.
We note that the overall Q3 earnings for the sector are expected to be up 5.6% year over year on a revenue increase of 5.3%. Notably, during the second quarter, the sector had witnessed an improvement of 4.4% and 4.6% in earnings and revenues, respectively.
However, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps, thereby limiting top-line growth of the restaurateurs.
Three restaurant companies are set to report their quarterly numbers on Oct 25. Will these companies manage to put up a decent performance? Let’s take a look at what might be in store for them this quarter:
Chipotle Mexican Grill, Inc. (CMG - Free Report) posted a negative earnings surprise of 11.22% last quarter. However, the trailing four-quarter average earnings surprise is a positive 5.50%.
CHIPOTLE MEXICN Price and EPS Surprise
CHIPOTLE MEXICN Price and EPS Surprise | CHIPOTLE MEXICN Quote
Notably, our proven model shows that an earnings beat is uncertain for Chipotle in the third quarter. This is because, according to our quantitative model, a company needs the right combination of the 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 third quarter of 2016, the company has an Earnings ESP of -5.52% and a Zacks Rank #4 (Sell), making it difficult to conclusively predict a beat. Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.63.
Despite various food-safety initiatives, Chipotle’s top- and bottom-line performance continues to suffer from the negative publicity surrounding the E. coli and norovirus outbreaks. We do not expect any significant improvement in Q3. However, the company’s temporary loyalty program, Chiptopia, might somewhat drive increased traffic and transactions (read more: Can Chipotle Pull Off a Surprise in Q3 Earnings?).
Panera Bread Company recorded a positive earnings surprise of 1.71% last quarter. In fact, the company posted positive earnings surprises in each of the past four quarters, with an average beat of 3.02%.
PANERA BREAD CO Price and EPS Surprise
PANERA BREAD CO Price and EPS Surprise | PANERA BREAD CO Quote
We note that Panera is unlikely to post a beat in third-quarter 2016 due to the combination of its Earnings ESP of +0.75% and Zacks Rank #4. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.34.
The company’s Panera 2.0 program, menu innovation, promotional strategies and new store design have been driving sales. We expect the trend to continue in Q3. However, high costs might impact profitability while a muted consumer spending environment in the U.S. restaurant industry might hurt comps (read more: What's in Store for Panera Bread in Q3 Earnings?).
Brinker International, Inc. (EAT - Free Report) registered a 0.81% positive earnings surprise in the previous quarter. In fact, the company surpassed the Zacks Consensus Estimate in each of the trailing for quarters, with an average beat of 1.91%.
BRINKER INTL Price and EPS Surprise
BRINKER INTL Price and EPS Surprise | BRINKER INTL Quote
For first-quarter fiscal 2017, the company has an Earnings ESP of 0.00%, which makes surprise prediction difficult even though the company has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for the quarter’s bottom line is pegged at 55 cents. Declining traffic trends at its restaurants might hurt the company’s comps and thereby sales. However, aggressive expansion strategies and sales building initiatives, like menu innovation and promotional offerings, should somewhat boost comps.
Stay tuned! Check back on our full write-up on earnings releases of these stocks.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>