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Fogo de Chao (FOGO) Q2 Earnings: Is a Surprise in Store?
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Fogo de Chao, Inc. is set to report its second-quarter 2016 results on Aug 9, after the market closes. This will mark the leading Brazilian steakhouse’s fifth quarterly earnings release since it began trading on Nasdaq in Jun 2015.
Last quarter, the company posted a negative earnings surprise of 8.70%. In fact, it has delivered an average positive surprise of 17.27% in the trailing four quarters.
Let’s see how things are shaping up for this announcement.
Fogo de Chao specializes in fire-roasting high-quality meats, using the centuries-old Southern Brazilian cooking technique of churrasco. Servers walk around with several varieties of meat − beef, lamb, chicken, pork and seafood − to suit the palate of diners. The company’s unique South American style of cooking on an open flame has helped it gain enormous popularity.
The top line in the second quarter should benefit from initiatives like menu innovation, marketing through various channels, re-imaging of restaurants and unit expansion efforts. However, foreign currency fluctuations may continue to hurt revenues.
In 2016, total revenue is expected in a range of $293 million to $297 million. Comparable restaurant sales are estimated to increase 1%–2%. Earnings are expected in the range of 93−96 cents per share.
Meanwhile, higher labor costs and costs related to sales initiatives are projected to keep second-quarter profits under pressure.
Earnings Whispers
Our proven model does not conclusively show that Fogo de Chao is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: The company has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 25 cents.
Zacks Rank: Fogo de Chao has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few companies in the restaurant industry which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , with an Earnings ESP of +2.27% and a Zacks Rank #1.
Jack in the Box Inc. (JACK - Free Report) with an Earnings ESP of +2.20% and a Zacks Rank #3.
Carrols Restaurant Group Inc. (TAST - Free Report) with an Earnings ESP of +4.35% and a Zacks Rank #3.
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 >>
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Fogo de Chao (FOGO) Q2 Earnings: Is a Surprise in Store?
Fogo de Chao, Inc. is set to report its second-quarter 2016 results on Aug 9, after the market closes. This will mark the leading Brazilian steakhouse’s fifth quarterly earnings release since it began trading on Nasdaq in Jun 2015.
Last quarter, the company posted a negative earnings surprise of 8.70%. In fact, it has delivered an average positive surprise of 17.27% in the trailing four quarters.
Let’s see how things are shaping up for this announcement.
FOGO DE CHAO Price and EPS Surprise
FOGO DE CHAO Price and EPS Surprise | FOGO DE CHAO Quote
Factors to Consider
Fogo de Chao specializes in fire-roasting high-quality meats, using the centuries-old Southern Brazilian cooking technique of churrasco. Servers walk around with several varieties of meat − beef, lamb, chicken, pork and seafood − to suit the palate of diners. The company’s unique South American style of cooking on an open flame has helped it gain enormous popularity.
The top line in the second quarter should benefit from initiatives like menu innovation, marketing through various channels, re-imaging of restaurants and unit expansion efforts. However, foreign currency fluctuations may continue to hurt revenues.
In 2016, total revenue is expected in a range of $293 million to $297 million. Comparable restaurant sales are estimated to increase 1%–2%. Earnings are expected in the range of 93−96 cents per share.
Meanwhile, higher labor costs and costs related to sales initiatives are projected to keep second-quarter profits under pressure.
Earnings Whispers
Our proven model does not conclusively show that Fogo de Chao is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: The company has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 25 cents.
Zacks Rank: Fogo de Chao has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few companies in the restaurant industry which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , with an Earnings ESP of +2.27% and a Zacks Rank #1.
Jack in the Box Inc. (JACK - Free Report) with an Earnings ESP of +2.20% and a Zacks Rank #3.
Carrols Restaurant Group Inc. (TAST - Free Report) with an Earnings ESP of +4.35% and a Zacks Rank #3.
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 >>