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Restaurants Dish Out Best Quarterly Sales in 3 Years: 5 Picks
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According to TDn2K’s latest Black Box report, the restaurant industry recorded it best quarter in three years in the third quarter. Although comps traffic has slowed in the last few months, robust sales have been driving the restaurant industry through this period. In 2017, the restaurant industry suffered in the third quarter after hurricanes hit Florida and Texas.
This year too, Hurricane Florence in the Carolinas somewhat hit restaurant spending in the third quarter. Moreover, rapidly rising interest rates have also resulted in diners cautiously spending at restaurants. Nonetheless, the restaurant industry seems to be on steady growth track with comps registering four straight months of positive year-over-year gains. Given this scenario it makes restaurant stocks must haves for your portfolio.
Restaurant Spending Weigh on Retail Sales
Per the Commerce Department, retail sales slowed in September as people spent less at restaurants, bars and department stores. This comes despite a flourishing economy, higher wages and robust consumer spending. That said, the restaurant industry has been facing a lull in traffic for some time. Moreover, concerns of rising interest rates have made diners spend cautiously at restaurants.
This definitely has been affecting the industry. Moreover, much like in 2017, the impact of Hurricane Florence too somewhat affected restaurant sales last month. Understandably, these factors have weighed on the restaurant industry in September. However, the impressive sales figures in the third quarter definitely indicate that the restaurant industry is bouncing back and is on steady growth track.
Restaurant Sales Hit Three-Year High in Third Quarter
Declining traffic has been a growing concern for the restaurant industry for some time now. Even then, the restaurant industry recorded its best quarter in three years, per TDn2K’s latest Black Box report. Same-store sales grew 1.2% in the third quarter, the best since the July-September period in 2015. Since the fourth quarter of 2015, the restaurant industry has not witnessed a quarter wherein all the three months had positive sales.
In September, comps grew 1.2%, marking the fourth straight month of year-over-year gains. Sales growth was spread out across the United States, with all the regions posting improvement during both September and the third quarter. Last year, sales were affected particularly in Florida, with hurricanes playing spoilsport. However, measured against last year, Florida recorded the best year-over-year performance with 5.4% compass and 4.31% traffic.
Also, job growth among chain restaurants is on the rise, up 2% year over year in August compared with 1.7% in July. Per the report, turnover for both hourly employees and restaurant managers declined in August. After escalating for years, turnover rates have finally started dropping in recent months. Understandably, the restaurant industry has started showing signs of bouncing back and is poised for growth in the coming days.
Our Choices
A lull in traffic has raised concerns over the growth of the restaurant industry. However, with the economy flourishing and the quarter’s restaurant sales being the best in three years, it seems the industry has finally started to bounce back.
This is why, picking restaurant stocks looks like a smart option. However, picking winning stocks may be difficult. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics. All of these stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Darden Restaurants, Inc. (DRI - Free Report) is a restaurant company featuring a portfolio of differentiated brands that include Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V's.
The company has expected earnings growth of 16.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 2% over the last 60 days.
The Wendy's Company (WEN - Free Report) is the world's third-largest quick-service hamburger company.
The company has expected earnings growth of 30.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.8% over the last 60 days.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is an owner and operator of venues in North America that combine dining and entertainment. The company offers its customers the opportunity to Eat Drink Play and Watch in one location.
The company has expected earnings growth of 5.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.1% over the last 60 days.
Denny's Corporation (DENN - Free Report) is one of the largest restaurant companies, operating moderately priced restaurants: Denny's, Hardee's, Quincy's, El Pollo Loco, Coco's and Carrows.
The company has expected earnings growth of 17.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.5% over the last 60 days.
BJ's Restaurants, Inc. (BJRI - Free Report) owns and operates restaurants in the United States. Each of the restaurants is operated either as a BJ's Restaurant & Brewery, a BJ's Restaurant & Brewhouse, or a BJ's Pizza & Grill.
The company has expected earnings growth of 50.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.5% over the last 60 days.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Restaurants Dish Out Best Quarterly Sales in 3 Years: 5 Picks
According to TDn2K’s latest Black Box report, the restaurant industry recorded it best quarter in three years in the third quarter. Although comps traffic has slowed in the last few months, robust sales have been driving the restaurant industry through this period. In 2017, the restaurant industry suffered in the third quarter after hurricanes hit Florida and Texas.
This year too, Hurricane Florence in the Carolinas somewhat hit restaurant spending in the third quarter. Moreover, rapidly rising interest rates have also resulted in diners cautiously spending at restaurants. Nonetheless, the restaurant industry seems to be on steady growth track with comps registering four straight months of positive year-over-year gains. Given this scenario it makes restaurant stocks must haves for your portfolio.
Restaurant Spending Weigh on Retail Sales
Per the Commerce Department, retail sales slowed in September as people spent less at restaurants, bars and department stores. This comes despite a flourishing economy, higher wages and robust consumer spending. That said, the restaurant industry has been facing a lull in traffic for some time. Moreover, concerns of rising interest rates have made diners spend cautiously at restaurants.
This definitely has been affecting the industry. Moreover, much like in 2017, the impact of Hurricane Florence too somewhat affected restaurant sales last month. Understandably, these factors have weighed on the restaurant industry in September. However, the impressive sales figures in the third quarter definitely indicate that the restaurant industry is bouncing back and is on steady growth track.
Restaurant Sales Hit Three-Year High in Third Quarter
Declining traffic has been a growing concern for the restaurant industry for some time now. Even then, the restaurant industry recorded its best quarter in three years, per TDn2K’s latest Black Box report. Same-store sales grew 1.2% in the third quarter, the best since the July-September period in 2015. Since the fourth quarter of 2015, the restaurant industry has not witnessed a quarter wherein all the three months had positive sales.
In September, comps grew 1.2%, marking the fourth straight month of year-over-year gains. Sales growth was spread out across the United States, with all the regions posting improvement during both September and the third quarter. Last year, sales were affected particularly in Florida, with hurricanes playing spoilsport. However, measured against last year, Florida recorded the best year-over-year performance with 5.4% compass and 4.31% traffic.
Also, job growth among chain restaurants is on the rise, up 2% year over year in August compared with 1.7% in July. Per the report, turnover for both hourly employees and restaurant managers declined in August. After escalating for years, turnover rates have finally started dropping in recent months. Understandably, the restaurant industry has started showing signs of bouncing back and is poised for growth in the coming days.
Our Choices
A lull in traffic has raised concerns over the growth of the restaurant industry. However, with the economy flourishing and the quarter’s restaurant sales being the best in three years, it seems the industry has finally started to bounce back.
This is why, picking restaurant stocks looks like a smart option. However, picking winning stocks may be difficult. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics. All of these stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Darden Restaurants, Inc. (DRI - Free Report) is a restaurant company featuring a portfolio of differentiated brands that include Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V's.
The company has expected earnings growth of 16.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 2% over the last 60 days.
The Wendy's Company (WEN - Free Report) is the world's third-largest quick-service hamburger company.
The company has expected earnings growth of 30.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.8% over the last 60 days.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is an owner and operator of venues in North America that combine dining and entertainment. The company offers its customers the opportunity to Eat Drink Play and Watch in one location.
The company has expected earnings growth of 5.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.1% over the last 60 days.
Denny's Corporation (DENN - Free Report) is one of the largest restaurant companies, operating moderately priced restaurants: Denny's, Hardee's, Quincy's, El Pollo Loco, Coco's and Carrows.
The company has expected earnings growth of 17.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.5% over the last 60 days.
BJ's Restaurants, Inc. (BJRI - Free Report) owns and operates restaurants in the United States. Each of the restaurants is operated either as a BJ's Restaurant & Brewery, a BJ's Restaurant & Brewhouse, or a BJ's Pizza & Grill.
The company has expected earnings growth of 50.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.5% over the last 60 days.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>