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Zacks Value Trader Highlights: Noodles & Company, Brinker International, Dine Equity, Bojangles and Chipotle
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For Immediate Release
Chicago, IL –Aug 18, 2017 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: (Please use the Soundcloud link from this URL for the PR. Thanks: https://www.zacks.com/stock/news/272173/restaurant-stocks-value-stocks-or-value-traps)
Restaurant Stocks: Value Plays or Value Traps?
Welcome to Episode #55 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.
In 2013 and 2014 more than a dozen restaurant companies went IPO to great fanfare. The stocks were bid up as investors bought into the growth plans of many of the regional chains.
But in 2017, these companies were hit with a new reality of rising costs, especially in labor and food, along with a competitive landscape.
The restaurant bubble has popped. Many of the restaurant stocks are down double digits for the year.
Do New Lows = Value?
Consider Noodles & Company (NASDAQ:(NDLS - Free Report) – Free Report). Shares are down 44% year-to-date and are trading at new all-time lows.
After it’s 2013 IPO, shares were as high as $45. They’re now trading under $5.
It’s not expected to be profitable this year as the 2017 estimate is calling for a loss of $0.01.
Is this a value stock or a value trap?
Definition of a Value Trap
Remember, a value trap can look a lot like a value stock. It might have a low P/E or P/B ratio. Shares may be hitting new lows. It might be in an industry getting the cold shoulder from Wall Street.
But a value stock will also have solid earnings, which are on the rise. A value trap will have declining earnings.
Tracey took a look to see if her favorite restaurant chains were a buying opportunity yet. She ran a screen that included just the restaurant industry and stocks with a P/E under 15.
There are 79 restaurant chains in Zacks “retail-restaurants” category.
Only 6 names came up which indicates that the industry is still “expensive” even with the stocks pulling back.
3 Restaurant Stocks: Are They a Value Stock or a Value Trap?
1. Brinker International (NYSE:(EAT - Free Report) – Free Report) operates Chili’s and Maggiano’s Little Italy. Shares are down 35% year-to-date. Brinker’s forward P/E is just 10.8 but what do the earnings estimates look like? Are they rising?
2. Dine Equity (NYSE:(DIN - Free Report) – Free Report) operates IHOP and Applebee’s. Second quarter was rough as it announced it was going to close between 105-135 Applebee’s and 20-25 IHOPs. Shares are down 47% year-t0-date. It has a forward P/E of 8.6. Is it a value stock or a value trap?
3. Bojangles (NASDAQ: – Free Report), the southeast regional fried chicken chain, saw lower same-store-sales last quarter. Shares have fallen 19% year-to-date and it now trades with a forward P/E of 16.3. Is this a buying opportunity?
Tracey also took a look at other restaurant companies that don’t yet have value fundamentals but whose shares are weak.
Chipotle (NYSE:(CMG - Free Report) – Free Report), for instance, is now trading at a 4-year low. Shares are down 32% in the last 3 months.
It currently trades with a forward P/E of 41 so it’s nowhere close to being a value even with the stock sell off.
But would it be a trap?
The key is those earnings estimates. Are they being cut or is the growth there for investors to keep it on their short list?
Find out the answer to this and more on this week’s podcast.
Want more value investing insights from Tracey?
Value investors are a special breed of investor. They don’t follow the herd.
If that is your style of investing, be sure to check out Tracey’s weekly Value Investor service to receive more in-depth analysis on value companies and see which stocks she thinks are the best bargains now.
The Value Investor portfolio holds between 20 and 25 value stocks for the long haul.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Value Trader Highlights: Noodles & Company, Brinker International, Dine Equity, Bojangles and Chipotle
For Immediate Release
Chicago, IL –Aug 18, 2017 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: (Please use the Soundcloud link from this URL for the PR. Thanks: https://www.zacks.com/stock/news/272173/restaurant-stocks-value-stocks-or-value-traps)
Restaurant Stocks: Value Plays or Value Traps?
Welcome to Episode #55 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.
In 2013 and 2014 more than a dozen restaurant companies went IPO to great fanfare. The stocks were bid up as investors bought into the growth plans of many of the regional chains.
But in 2017, these companies were hit with a new reality of rising costs, especially in labor and food, along with a competitive landscape.
The restaurant bubble has popped. Many of the restaurant stocks are down double digits for the year.
Do New Lows = Value?
Consider Noodles & Company (NASDAQ:(NDLS - Free Report) – Free Report). Shares are down 44% year-to-date and are trading at new all-time lows.
After it’s 2013 IPO, shares were as high as $45. They’re now trading under $5.
It’s not expected to be profitable this year as the 2017 estimate is calling for a loss of $0.01.
Is this a value stock or a value trap?
Definition of a Value Trap
Remember, a value trap can look a lot like a value stock. It might have a low P/E or P/B ratio. Shares may be hitting new lows. It might be in an industry getting the cold shoulder from Wall Street.
But a value stock will also have solid earnings, which are on the rise. A value trap will have declining earnings.
Tracey took a look to see if her favorite restaurant chains were a buying opportunity yet. She ran a screen that included just the restaurant industry and stocks with a P/E under 15.
There are 79 restaurant chains in Zacks “retail-restaurants” category.
Only 6 names came up which indicates that the industry is still “expensive” even with the stocks pulling back.
3 Restaurant Stocks: Are They a Value Stock or a Value Trap?
1. Brinker International (NYSE:(EAT - Free Report) – Free Report) operates Chili’s and Maggiano’s Little Italy. Shares are down 35% year-to-date. Brinker’s forward P/E is just 10.8 but what do the earnings estimates look like? Are they rising?
2. Dine Equity (NYSE:(DIN - Free Report) – Free Report) operates IHOP and Applebee’s. Second quarter was rough as it announced it was going to close between 105-135 Applebee’s and 20-25 IHOPs. Shares are down 47% year-t0-date. It has a forward P/E of 8.6. Is it a value stock or a value trap?
3. Bojangles (NASDAQ: – Free Report), the southeast regional fried chicken chain, saw lower same-store-sales last quarter. Shares have fallen 19% year-to-date and it now trades with a forward P/E of 16.3. Is this a buying opportunity?
Tracey also took a look at other restaurant companies that don’t yet have value fundamentals but whose shares are weak.
Chipotle (NYSE:(CMG - Free Report) – Free Report), for instance, is now trading at a 4-year low. Shares are down 32% in the last 3 months.
It currently trades with a forward P/E of 41 so it’s nowhere close to being a value even with the stock sell off.
But would it be a trap?
The key is those earnings estimates. Are they being cut or is the growth there for investors to keep it on their short list?
Find out the answer to this and more on this week’s podcast.
Want more value investing insights from Tracey?
Value investors are a special breed of investor. They don’t follow the herd.
If that is your style of investing, be sure to check out Tracey’s weekly Value Investor service to receive more in-depth analysis on value companies and see which stocks she thinks are the best bargains now.
The Value Investor portfolio holds between 20 and 25 value stocks for the long haul.
Click here to learn more>>>
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.