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Will Soft Comps Hurt Habit Restaurants (HABT) Q2 Earnings?
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The Habit Restaurants, Inc. is scheduled to report second-quarter 2018 results on Aug 1, after market close. Notably, the company missed estimates in two of the trailing three quarters. In fact, its earnings lagged the Zacks Consensus Estimate by 66.7% in the last reported quarter.
Q2 Expectations
The question lingering in investors’ minds now is whether Habit Restaurants will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for second-quarter earnings is pegged at 3 cents, lower than 6 cents reported in the year-ago quarter.
In the past 30 days, the company’s earnings estimates have been stable. Moreover, the Zacks Consensus Estimate for revenues is $100 million, up 19.7% from the prior-year actual figure.
Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.
Factors at Play
Habit Restaurants’ differentiated brand positioning, successful marketing and culinary innovation are the key revenue drivers. However, decline in comparable restaurant sales over the past few quarters has been a major concern for the company. In the first quarter, comparable restaurant sales decreased 1.4% due to dismal traffic. Per the Zacks Consensus Estimate, the company’s comps in the second quarter are likely to decline by nearly 0.7%.
Still, we believe that excellent operational execution, high quality limited time offers, targeted digital strategies and innovative media partnerships might drive the company’s traffic in the second quarter and in turn comps.
However, higher costs might dent the company’s earnings in the second quarter. In the first quarter, food and paper costs increased 130 basis points year-over-year to 30.5%. Further, pre-opening costs will continue to put pressure on the company’s margin. Incremental investments in marketing programs and promotional activity as well as consistently high labor expenses are also expected to weigh on margins.
The Habit Restaurants, Inc. Price, Consensus and EPS Surprise
Our proven model does not conclusively show that Habit Restaurants is likely to beat earnings estimates in the second 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Habit Restaurants has an Earnings ESP of -33.33% and a Zacks Rank #4 (Sell), consequently making the surprise prediction difficult.
Stocks to Consider
Here are a few other stocks from the Restaurant space that investors may consider, as our model shows that they also have the right combination of elements to post an earnings beat this quarter:
Hilton Grand Vacations Inc. (HGV - Free Report) has an Earnings ESP of +11.36% and a Zacks Rank of 2.
Red Rock Resorts, Inc. (RRR - Free Report) has an Earnings ESP of +4.00% and a Zacks Rank #2.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Will Soft Comps Hurt Habit Restaurants (HABT) Q2 Earnings?
The Habit Restaurants, Inc. is scheduled to report second-quarter 2018 results on Aug 1, after market close. Notably, the company missed estimates in two of the trailing three quarters. In fact, its earnings lagged the Zacks Consensus Estimate by 66.7% in the last reported quarter.
Q2 Expectations
The question lingering in investors’ minds now is whether Habit Restaurants will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for second-quarter earnings is pegged at 3 cents, lower than 6 cents reported in the year-ago quarter.
In the past 30 days, the company’s earnings estimates have been stable. Moreover, the Zacks Consensus Estimate for revenues is $100 million, up 19.7% from the prior-year actual figure.
Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.
Factors at Play
Habit Restaurants’ differentiated brand positioning, successful marketing and culinary innovation are the key revenue drivers. However, decline in comparable restaurant sales over the past few quarters has been a major concern for the company. In the first quarter, comparable restaurant sales decreased 1.4% due to dismal traffic. Per the Zacks Consensus Estimate, the company’s comps in the second quarter are likely to decline by nearly 0.7%.
Still, we believe that excellent operational execution, high quality limited time offers, targeted digital strategies and innovative media partnerships might drive the company’s traffic in the second quarter and in turn comps.
However, higher costs might dent the company’s earnings in the second quarter. In the first quarter, food and paper costs increased 130 basis points year-over-year to 30.5%. Further, pre-opening costs will continue to put pressure on the company’s margin. Incremental investments in marketing programs and promotional activity as well as consistently high labor expenses are also expected to weigh on margins.
The Habit Restaurants, Inc. Price, Consensus and EPS Surprise
The Habit Restaurants, Inc. Price, Consensus and EPS Surprise | The Habit Restaurants, Inc. Quote
What Does the Zacks Model Say?
Our proven model does not conclusively show that Habit Restaurants is likely to beat earnings estimates in the second 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Habit Restaurants has an Earnings ESP of -33.33% and a Zacks Rank #4 (Sell), consequently making the surprise prediction difficult.
Stocks to Consider
Here are a few other stocks from the Restaurant space that investors may consider, as our model shows that they also have the right combination of elements to post an earnings beat this quarter:
Hyatt Hotels Corp. (H - Free Report) has an Earnings ESP of +7.29% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hilton Grand Vacations Inc. (HGV - Free Report) has an Earnings ESP of +11.36% and a Zacks Rank of 2.
Red Rock Resorts, Inc. (RRR - Free Report) has an Earnings ESP of +4.00% and a Zacks Rank #2.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>