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Restaurant Stock Earnings Due on Jul 26: SBUX, MCD & More
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As the second-quarter earnings season is ongoing, investors may want to pay attention to the restaurant industry, which has been showing recovery of late. The latest Earnings Preview (as of Jul 20) shows upbeat expectations from this earnings season, with the bottom line of the S&P 500 index expected to grow 21% and revenues projected to rise 8.3%. In the first quarter, the S&P 500 companies witnessed earnings and revenue growth of 24.6% and 8.7%, respectively.
Also, out of the 87 S&P 500 companies that have come up with their financial numbers, 86.2% outpaced earnings estimates and 77% exceeded top-line expectations. Total earnings of these companies increased 20.9% from the same period last year on 10.3% higher revenues.
Retail Sector Earnings Expectations
Majority of the Zacks broad sectors (11 out of 16) are expected to report double-digit growth in the second quarter. Restaurants in the wider Retail-Wholesale sector seem to have a solid footing as well. The latest earnings outlook predicts an 18.4% rise in the sector’s second-quarter earnings compared with 21.1% growth in the last-reported quarter. Revenues are expected to rise 7.9% (a little lower than first quarter’s 8.8%). Margins are anticipated to increase 0.4%, compared with the prior quarter’s increase of 0.5%.
Restaurant Industry Looks Up
After surviving the seven-quarter spell of declining comps, the restaurant industry made a spectacular comeback in the fourth quarter of 2017. Ever since, the industry has been recovering, slow yet steady. Per TDn2K’s The Restaurant Industry Snapshot, the industry witnessed comps growth in three straight quarters — 0.4% in fourth-quarter 2017, 0.1% in first-quarter 2018 and 0.8% in the second quarter. In the first half of 2018, overall sales nudged up 0.5% against a 1.2% fall in the first half of 2017.
Growth in comps throughout the first half of 2018 can be attributed to a rise in consumer demand and discretionary spending. This is evident from the guest check’s growth in recent quarters. For the first six months of 2018, average check increased 2.9%, up from the 2.2% rise a year ago.
Despite the improving trend, a few concerns hover. The overall Retail – Restaurants industry’s year-to-date collective decline has been 2.1% against the S&P Composite market’s increase of 5.3%. Persistent erosion in traffic is the foremost concern. Notably, same-store traffic was down 2% in the second quarter of 2018, per TDN2K, proving that only guest checks and not guest counts are contributing to restaurant sales.
Restaurant Stocks to Report Earnings on Jul 26
Coffee chain giant Starbucks Corporation (SBUX - Free Report) will report third-quarter fiscal 2018 results. The question lingering in investors’ minds now is whether Starbucks will be able to deliver a positive earnings surprise. The Zacks Consensus Estimate for fiscal third-quarter earnings is 60 cents, higher than 55 cents in the year-ago quarter. Meanwhile, the Zacks Consensus Estimate for revenues is nearly $6.3 billion, up 10.6% from the prior-year quarter reported figure.
Starbucks, which has reported top-line growth in the first and second quarter of fiscal 2018, will continue with the momentum in the to-be-reported quarter as well. The metric is likely to be driven by new store additions, expansion in China, positive global comparable store sales or simply comps growth, and higher revenues from business segments. (Read More: Starbucks Q3 Earnings: Will Americas, CAP Aid Growth?)
The company carries a Zacks Rank #3 (Hold) and an Earnings ESP of +0.28%, a combination that indicates a likely beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
McDonald's Corporation (MCD - Free Report) , which is set to release second-quarter numbers, reported comparable sales growth for 11 straight quarters and is likely to continue the uptrend. We believe the company’s sales building initiatives are driving global comparable sales (comps). Increase in global guest count is boosting the company’s performance as well. Notably, the first quarter marked McDonald’s fifth straight quarter of a year-over-year rise in global guest counts. The consensus estimate for the second quarter is pegged at $1.92, reflecting 11% year-over-year growth. However, revenues for the quarter are expected to decline 12.1% from the prior-year quarter. (Read More: McDonald's Q2 Earnings: Will Solid Comps Trend Continue?)
Chipotle Mexican Grill, Inc. (CMG - Free Report) , carries a Zacks Rank #2 (Buy) but has an Earnings ESP of -0.16%, that dims our chances of predicting a beat. Chipotle’s top line in the second quarter is expected to grow from increased comps and restaurant openings. Meanwhile, roll out of queso has substantially spurred sales of the company. Evidently, queso added 200 basis points (bps) to the average check in the first quarter of 2018.
The Zacks Consensus Estimate for earnings is $2.78, which is higher than $2.32 reported in the year-ago quarter. Also, revenues in the quarter are projected to grow 7.9% year over year. (Read More: What's in the Cards for Chipotle This Earnings Season?).
Chipotle Mexican Grill, Inc. Price and EPS Surprise
Dunkin' Brands Group, Inc. which operates through the Dunkin' Donuts and Baskin-Robbins brands, is likely to have gained from menu innovations, breakfast menu optimization, loyalty programs, digital and sales building initiatives in the second quarter of 2018.
The consensus estimate for second-quarter earnings is pegged at 74 cents, higher than 64 cents reported in the year-ago quarter. The Zacks Consensus Estimate for revenues of nearly $342 million, is up 56.5% from the prior-year quarter’s reported figure. The company despite carrying a Zacks Rank #2, has an Earnings ESP of -0.10%, decreasing the odds of our predicting a beat. (Read More: Dunkin' Brands Q2 Earnings: What's in the Cards?)
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Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Restaurant Stock Earnings Due on Jul 26: SBUX, MCD & More
As the second-quarter earnings season is ongoing, investors may want to pay attention to the restaurant industry, which has been showing recovery of late. The latest Earnings Preview (as of Jul 20) shows upbeat expectations from this earnings season, with the bottom line of the S&P 500 index expected to grow 21% and revenues projected to rise 8.3%. In the first quarter, the S&P 500 companies witnessed earnings and revenue growth of 24.6% and 8.7%, respectively.
Also, out of the 87 S&P 500 companies that have come up with their financial numbers, 86.2% outpaced earnings estimates and 77% exceeded top-line expectations. Total earnings of these companies increased 20.9% from the same period last year on 10.3% higher revenues.
Retail Sector Earnings Expectations
Majority of the Zacks broad sectors (11 out of 16) are expected to report double-digit growth in the second quarter. Restaurants in the wider Retail-Wholesale sector seem to have a solid footing as well. The latest earnings outlook predicts an 18.4% rise in the sector’s second-quarter earnings compared with 21.1% growth in the last-reported quarter. Revenues are expected to rise 7.9% (a little lower than first quarter’s 8.8%). Margins are anticipated to increase 0.4%, compared with the prior quarter’s increase of 0.5%.
Restaurant Industry Looks Up
After surviving the seven-quarter spell of declining comps, the restaurant industry made a spectacular comeback in the fourth quarter of 2017. Ever since, the industry has been recovering, slow yet steady. Per TDn2K’s The Restaurant Industry Snapshot, the industry witnessed comps growth in three straight quarters — 0.4% in fourth-quarter 2017, 0.1% in first-quarter 2018 and 0.8% in the second quarter. In the first half of 2018, overall sales nudged up 0.5% against a 1.2% fall in the first half of 2017.
Growth in comps throughout the first half of 2018 can be attributed to a rise in consumer demand and discretionary spending. This is evident from the guest check’s growth in recent quarters. For the first six months of 2018, average check increased 2.9%, up from the 2.2% rise a year ago.
Despite the improving trend, a few concerns hover. The overall Retail – Restaurants industry’s year-to-date collective decline has been 2.1% against the S&P Composite market’s increase of 5.3%. Persistent erosion in traffic is the foremost concern. Notably, same-store traffic was down 2% in the second quarter of 2018, per TDN2K, proving that only guest checks and not guest counts are contributing to restaurant sales.
Restaurant Stocks to Report Earnings on Jul 26
Coffee chain giant Starbucks Corporation (SBUX - Free Report) will report third-quarter fiscal 2018 results. The question lingering in investors’ minds now is whether Starbucks will be able to deliver a positive earnings surprise. The Zacks Consensus Estimate for fiscal third-quarter earnings is 60 cents, higher than 55 cents in the year-ago quarter. Meanwhile, the Zacks Consensus Estimate for revenues is nearly $6.3 billion, up 10.6% from the prior-year quarter reported figure.
Starbucks, which has reported top-line growth in the first and second quarter of fiscal 2018, will continue with the momentum in the to-be-reported quarter as well. The metric is likely to be driven by new store additions, expansion in China, positive global comparable store sales or simply comps growth, and higher revenues from business segments. (Read More: Starbucks Q3 Earnings: Will Americas, CAP Aid Growth?)
The company carries a Zacks Rank #3 (Hold) and an Earnings ESP of +0.28%, a combination that indicates a likely beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Starbucks Corporation Price and EPS Surprise
Starbucks Corporation Price and EPS Surprise | Starbucks Corporation Quote
McDonald's Corporation (MCD - Free Report) , which is set to release second-quarter numbers, reported comparable sales growth for 11 straight quarters and is likely to continue the uptrend. We believe the company’s sales building initiatives are driving global comparable sales (comps). Increase in global guest count is boosting the company’s performance as well. Notably, the first quarter marked McDonald’s fifth straight quarter of a year-over-year rise in global guest counts. The consensus estimate for the second quarter is pegged at $1.92, reflecting 11% year-over-year growth. However, revenues for the quarter are expected to decline 12.1% from the prior-year quarter. (Read More: McDonald's Q2 Earnings: Will Solid Comps Trend Continue?)
Mc Donald’s holds a Zacks Rank #3 and has an Earnings ESP of +0.39%, increasing the odds of a beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McDonald's Corporation Price and EPS Surprise
McDonald's Corporation Price and EPS Surprise | McDonald's Corporation Quote
Chipotle Mexican Grill, Inc. (CMG - Free Report) , carries a Zacks Rank #2 (Buy) but has an Earnings ESP of -0.16%, that dims our chances of predicting a beat. Chipotle’s top line in the second quarter is expected to grow from increased comps and restaurant openings. Meanwhile, roll out of queso has substantially spurred sales of the company. Evidently, queso added 200 basis points (bps) to the average check in the first quarter of 2018.
The Zacks Consensus Estimate for earnings is $2.78, which is higher than $2.32 reported in the year-ago quarter. Also, revenues in the quarter are projected to grow 7.9% year over year. (Read More: What's in the Cards for Chipotle This Earnings Season?).
Chipotle Mexican Grill, Inc. Price and EPS Surprise
Chipotle Mexican Grill, Inc. Price and EPS Surprise | Chipotle Mexican Grill, Inc. Quote
Dunkin' Brands Group, Inc. which operates through the Dunkin' Donuts and Baskin-Robbins brands, is likely to have gained from menu innovations, breakfast menu optimization, loyalty programs, digital and sales building initiatives in the second quarter of 2018.
The consensus estimate for second-quarter earnings is pegged at 74 cents, higher than 64 cents reported in the year-ago quarter. The Zacks Consensus Estimate for revenues of nearly $342 million, is up 56.5% from the prior-year quarter’s reported figure. The company despite carrying a Zacks Rank #2, has an Earnings ESP of -0.10%, decreasing the odds of our predicting a beat. (Read More: Dunkin' Brands Q2 Earnings: What's in the Cards?)
Dunkin' Brands Group, Inc. Price and EPS Surprise
Dunkin' Brands Group, Inc. Price and EPS Surprise | Dunkin' Brands Group, Inc. Quote
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>