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Restaurant Stocks to Watch for Earnings on Nov 2: RRGB, HABT
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The Q3 earnings season is well under way with 291 of the S&P 500 members having already reported their quarterly numbers (as of Oct 28).
According to the latest Earnings Preview, total earnings for these 291 companies are up 2.2% from the year-ago quarter, courtesy of a 1.3% rise in revenues. Notably, 73.5% of the companies that have reported their quarterly numbers have surpassed earnings estimates while 57.4% have exceeded top-line expectations.
Turning our focus to the widely popular restaurant industry, we note that the performance of the restaurant stocks has been far from impressive so far.
Among the restaurant behemoths that have already reported their numbers, McDonald’s Corporation (MCD - Free Report) and Domino’s Pizza Inc. (DPZ - Free Report) posted robust results beating earnings and revenue estimates.
Though Yum! Brands, Inc.’s (YUM - Free Report) earnings were in line with the Zacks Consensus Estimate, revenues failed to surpass the same. Dunkin’ Brands Group and Buffalo Wild Wings Inc. also missed top-line expectations.
Two other key players, BJ’s Restaurants, Inc. (BJRI - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) , posted disappointing results wherein both earnings and sales missed estimates.
We thus note that a soft consumer spending environment in the U.S. restaurant space, which is leading to lower traffic and comps, is turning out to be a major headwind for the top line.
Two restaurateurs are set to report their quarterly numbers on Nov 2. Let’s take a look at what might be in store for these companies:
Red Robin Gourmet Burgers Inc. (RRGB - Free Report) recorded a negative earnings surprise of 5.06% last quarter. However, before that, the company surpassed earnings estimates in the three trailing quarters, bringing the average surprise in last four quarters to a positive 6.50%.
Notably, our proven model shows that an earnings beat is uncertain for Red Robin in third-quarter fiscal 2016. This is because, according to our quantitative model, a company needs the right combination of the two key ingredients – a Zacks Rank #3 (Hold) or better and a positive Earnings ESP – to increase its odds of an earnings surprise. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
For the quarter, the company has an earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell), making it difficult to conclusively predict a beat.
Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at 38 cents. Higher labor costs, expenses related to various sales building initiatives along with pre-opening and remodeling expenditures are expected to put pressure on fiscal third-quarter margins. However, the company’s brand transformation initiatives, and the introduction of a strategic plan to drive sales and lower expenses could somewhat boost the results (read more: Red Robin Q3 Earnings: A Disappointment in Store?).
The Habit Restaurants, Inc. posted a 10.001% negative earnings surprise last quarter. Meanwhile, the trailing four-quarter average earnings surprise stands at a positive 8.75%.
For the third quarter, the Zacks Consensus Estimate is pegged at 6 cents per share. We note that Habit Restaurants is unlikely to post a beat in third-quarter 2016 due to the combination of Earnings ESP of 0.00% and its Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The second quarter marked the company’s 50th consecutive year-over-year growth in comps. We expect the trend to continue in Q3 given the company’s high quality Limited Time Offers, targeted digital strategies and innovative media partnerships, together with great operational execution. However, higher costs might hamper the quarter’s profitability while a challenging sales environment in the restaurant space could hurt revenues (read more: Habit Restaurants Q3 Earnings: What's in Store?).
Stay tuned! Check back on our full write-up on earnings releases of these stocks.
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Restaurant Stocks to Watch for Earnings on Nov 2: RRGB, HABT
The Q3 earnings season is well under way with 291 of the S&P 500 members having already reported their quarterly numbers (as of Oct 28).
According to the latest Earnings Preview, total earnings for these 291 companies are up 2.2% from the year-ago quarter, courtesy of a 1.3% rise in revenues. Notably, 73.5% of the companies that have reported their quarterly numbers have surpassed earnings estimates while 57.4% have exceeded top-line expectations.
Turning our focus to the widely popular restaurant industry, we note that the performance of the restaurant stocks has been far from impressive so far.
Among the restaurant behemoths that have already reported their numbers, McDonald’s Corporation (MCD - Free Report) and Domino’s Pizza Inc. (DPZ - Free Report) posted robust results beating earnings and revenue estimates.
Though Yum! Brands, Inc.’s (YUM - Free Report) earnings were in line with the Zacks Consensus Estimate, revenues failed to surpass the same. Dunkin’ Brands Group and Buffalo Wild Wings Inc. also missed top-line expectations.
Two other key players, BJ’s Restaurants, Inc. (BJRI - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) , posted disappointing results wherein both earnings and sales missed estimates.
We thus note that a soft consumer spending environment in the U.S. restaurant space, which is leading to lower traffic and comps, is turning out to be a major headwind for the top line.
Two restaurateurs are set to report their quarterly numbers on Nov 2. Let’s take a look at what might be in store for these companies:
Red Robin Gourmet Burgers Inc. (RRGB - Free Report) recorded a negative earnings surprise of 5.06% last quarter. However, before that, the company surpassed earnings estimates in the three trailing quarters, bringing the average surprise in last four quarters to a positive 6.50%.
RED ROBIN GOURM Price and EPS Surprise
RED ROBIN GOURM Price and EPS Surprise | RED ROBIN GOURM Quote
Notably, our proven model shows that an earnings beat is uncertain for Red Robin in third-quarter fiscal 2016. This is because, according to our quantitative model, a company needs the right combination of the two key ingredients – a Zacks Rank #3 (Hold) or better and a positive Earnings ESP – to increase its odds of an earnings surprise. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
For the quarter, the company has an earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell), making it difficult to conclusively predict a beat.
Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at 38 cents. Higher labor costs, expenses related to various sales building initiatives along with pre-opening and remodeling expenditures are expected to put pressure on fiscal third-quarter margins. However, the company’s brand transformation initiatives, and the introduction of a strategic plan to drive sales and lower expenses could somewhat boost the results (read more: Red Robin Q3 Earnings: A Disappointment in Store?).
The Habit Restaurants, Inc. posted a 10.001% negative earnings surprise last quarter. Meanwhile, the trailing four-quarter average earnings surprise stands at a positive 8.75%.
HABIT RESTRNTS Price and EPS Surprise
HABIT RESTRNTS Price and EPS Surprise | HABIT RESTRNTS Quote
For the third quarter, the Zacks Consensus Estimate is pegged at 6 cents per share. We note that Habit Restaurants is unlikely to post a beat in third-quarter 2016 due to the combination of Earnings ESP of 0.00% and its Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The second quarter marked the company’s 50th consecutive year-over-year growth in comps. We expect the trend to continue in Q3 given the company’s high quality Limited Time Offers, targeted digital strategies and innovative media partnerships, together with great operational execution. However, higher costs might hamper the quarter’s profitability while a challenging sales environment in the restaurant space could hurt revenues (read more: Habit Restaurants Q3 Earnings: What's in Store?).
Stay tuned! Check back on our full write-up on earnings releases of these stocks.
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>