Back to top

Image: Bigstock

What Will Restaurateurs BLMN, RUTH Serve Up in Q3 Earnings?

Read MoreHide Full Article

We are in the thick of the Q3 earnings season with releases from 198 of the S&P 500 members (as of Oct 26), per the latest Earnings Outlook report.

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 their respective earnings and revenue estimates.

Though Yum! Brands, Inc. (YUM - Free Report) earnings were in line with the Zacks Consensus Estimate, revenues failed to surpass the same. Dunkin’ Brands Group too missed the 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 their respective 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 top-line headwind.

Two restaurateurs are set to report their quarterly numbers on Oct 28. Will these companies manage to put up a decent performance? Let’s take a look at what might be in store for them:

Bloomin' Brands, Inc. (BLMN - Free Report) posted a positive earnings surprise of 3.45% last quarter. In fact, the company surpassed the Zacks Consensus Estimate in three of the past four quarters, with an average beat of 4.07%.

BLOOMIN BRANDS Price and EPS Surprise

 

BLOOMIN BRANDS Price and EPS Surprise | BLOOMIN BRANDS Quote

Notably, our proven model shows that an earnings beat is uncertain for Bloomin' Brands 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 positive Earnings ESP and a Zacks Rank #3 (Hold) or better – 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.

We cannot conclusively predict a beat for the quarter, as the company has an Earnings ESP of -5.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at 20 cents.

Ruth's Hospitality Group Inc. registered a 4.35% negative earnings surprise in the previous quarter. Moreover, the trailing four-quarter average earnings surprise stands at a negative 1.52%.

RUTHS HOSPITLTY Price and EPS Surprise

 

RUTHS HOSPITLTY Price and EPS Surprise | RUTHS HOSPITLTY Quote

We note that Ruth's Hospitality Group is unlikely to post a beat in third-quarter 2016 due to the combination of its Zacks Rank #3 and Earnings ESP of 0.00%. The Zacks Consensus Estimate for the quarter’s bottom line is pegged at 9 cents.

Stay tuned! Check back on our full write-up on earnings releases of these stocks.

Confidential: Zacks' Best Investment Ideas  

Would you like to see a hand-picked ""all-star"" selection of investment ideas from the man who heads up Zacks' trading and investing services? Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand. Click for his selected trades right now >>

Published in