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While the overall market has delivered an impressive return in 2024, the same can't be said for all, particularly Starbucks. Shares have faced consistent pressure amid worries surrounding China and declining same store sales.
However, shares popped following news that Chipotle Mexican Grill CEO Brian Niccol would be replacing Laxman Narasimhan as CEO of the company. Conversely, CMG shares fell following the news.
In addition, it's critical to note that Brian Niccol previously served as CEO of Taco Bell, which is operated by Yum Brands.
But can the company turn around? Let's take a closer look at how it currently stacks up.
Starbucks Steals Brian Niccol
Starbucks' most recent quarterly release was met with modest positivity, with shares seeing an initial positive move before reversing lower in the days following. The company posted somewhat mixed top and bottom line results, meeting the Zacks Consensus EPS estimate but modestly falling short of sales expectations.
Earnings revisions have been taken modestly lower across the board over recent months.
Sales fell 1% year-over-year, whereas EPS declined 7%. Global comparable store sales came in weak, falling 3% from the year-ago period alongside a 5% decline in comparable transactions. Higher prices have helped offset the slump, though, with its average ticket moving 2% higher.
The average ticket increase does raise some eyebrows, leaving some to wonder if consumers can increasingly pay higher prices after years of already doing so.
As mentioned previously, woes in China have been felt heavily by the company, with the recent quarterly print again confirming the trend – China comparable store sales fell 14% alongside a 7% decline in both average ticket and comparable transactions.
Chipotle Shares Provide Stunning Returns
CMG shares have been considerably strong over the years, reflecting one of the top-performing restaurant stocks overall. Though its recent set of quarterly results brought about some profit-taking, the performance disparity has been immense over the past year.
Unlike SBUX, Chipotle has seen notable success in its established locations, seeing comparable restaurant sales growth of 11% throughout its latest period. Revenue growth, in general, was also strong, jumping nearly 20% higher to $3 billion.
CMG has also enjoyed margin expansion over the years, unlocking higher profitability thanks to consistent cost efficiencies.
All in all, CMG has been firing on all cylinders throughout recent periods, reflected by its bullish share movement.
Putting Everything Together
Starbucks investors got much-needed relief following the announcement of a new CEO, who comes from none other than the highly successful Chipotle.
Of course, time will tell if the CEO rotation ends up paying dividends for SBUX, but given Brian Niccol's track record, the company certainly appears to be in good hands. Still, it's worth noting that SBUX's earnings outlook remains hazy, and investors should be instead waiting for positive earnings estimate revisions to hit the tape, signaling a bullish change in analyst sentiment.
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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.
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Zacks Investment Ideas feature highlights: Starbucks, Chipotle Mexican Grill and Yum Brands
For Immediate Release
Chicago, IL – August 15, 2024 – Today, Zacks Investment Ideas feature highlights Starbucks (SBUX - Free Report) , Chipotle Mexican Grill (CMG - Free Report) and Yum Brands (YUM - Free Report) .
Starbucks Replaces CEO: Time to Buy?
While the overall market has delivered an impressive return in 2024, the same can't be said for all, particularly Starbucks. Shares have faced consistent pressure amid worries surrounding China and declining same store sales.
However, shares popped following news that Chipotle Mexican Grill CEO Brian Niccol would be replacing Laxman Narasimhan as CEO of the company. Conversely, CMG shares fell following the news.
In addition, it's critical to note that Brian Niccol previously served as CEO of Taco Bell, which is operated by Yum Brands.
But can the company turn around? Let's take a closer look at how it currently stacks up.
Starbucks Steals Brian Niccol
Starbucks' most recent quarterly release was met with modest positivity, with shares seeing an initial positive move before reversing lower in the days following. The company posted somewhat mixed top and bottom line results, meeting the Zacks Consensus EPS estimate but modestly falling short of sales expectations.
Earnings revisions have been taken modestly lower across the board over recent months.
Sales fell 1% year-over-year, whereas EPS declined 7%. Global comparable store sales came in weak, falling 3% from the year-ago period alongside a 5% decline in comparable transactions. Higher prices have helped offset the slump, though, with its average ticket moving 2% higher.
The average ticket increase does raise some eyebrows, leaving some to wonder if consumers can increasingly pay higher prices after years of already doing so.
As mentioned previously, woes in China have been felt heavily by the company, with the recent quarterly print again confirming the trend – China comparable store sales fell 14% alongside a 7% decline in both average ticket and comparable transactions.
Chipotle Shares Provide Stunning Returns
CMG shares have been considerably strong over the years, reflecting one of the top-performing restaurant stocks overall. Though its recent set of quarterly results brought about some profit-taking, the performance disparity has been immense over the past year.
Unlike SBUX, Chipotle has seen notable success in its established locations, seeing comparable restaurant sales growth of 11% throughout its latest period. Revenue growth, in general, was also strong, jumping nearly 20% higher to $3 billion.
CMG has also enjoyed margin expansion over the years, unlocking higher profitability thanks to consistent cost efficiencies.
All in all, CMG has been firing on all cylinders throughout recent periods, reflected by its bullish share movement.
Putting Everything Together
Starbucks investors got much-needed relief following the announcement of a new CEO, who comes from none other than the highly successful Chipotle.
Of course, time will tell if the CEO rotation ends up paying dividends for SBUX, but given Brian Niccol's track record, the company certainly appears to be in good hands. Still, it's worth noting that SBUX's earnings outlook remains hazy, and investors should be instead waiting for positive earnings estimate revisions to hit the tape, signaling a bullish change in analyst sentiment.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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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.