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Restaurant Q1 Earnings: Key Predictions for TAST, WEN & NDLS

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The first-quarter earnings season has witnessed releases from more than half of the restaurant companies. Notably, the results so far gained from increased consumer spending, restaurateurs’ focus on digital innovation and improvement in average check. However, the industry continues to bear the brunt of declining traffic and intense competition.

Q1 Report Card

The restaurant industry has impressed investors with same-store sales growth for the fourth straight quarter this reporting cycle. Per TDn2K’s The Restaurant Industry Snapshot, the overall first quarter was satisfactory, with 1% comps growth. Also, guest check-in grew 0.8% year over year, offsetting the negative impact of traffic erosion. Most of the restaurant operators have been continuously partnering with delivery channels and digital platforms to drive incremental sales.

However, same-store traffic declined 2% in the quarter. Persistent erosion in traffic despite comps growth indicates that it is only guest checks and not guest count that contributed to restaurant sales. This also means that consumers are not visiting restaurants frequently and getting increasingly reliant on delivery services.

Additionally, restaurant giants are negatively impacted by high cost of operations. Further, sales-building efforts such as promotional activities and a convincing pricing strategy are weighing on margins.

Stocks Scheduled to Report Q1 Earnings This Week

Carrols Restaurant Group, Inc. (TAST - Free Report) is scheduled to report financial numbers on May 8. The company delivered in-line earnings in the preceding quarter. Notably, the bottom line surpassed the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 17.8%.

For the first quarter, the Zacks Consensus Estimate is pegged at a loss of 16 cents compared with a loss of 8 cents incurred in the prior-year quarter. The consensus mark for quarterly revenues is pinned at $292.3 million, indicating a 7.6% rise from the year-ago quarter’s reported number.

According to the Zacks model, Carrols Restaurant is unlikely to beat earnings estimates this quarter. Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP the chance of beating earnings estimates is high. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Carrols Restaurant’s Earnings ESP of -34.04% and a Zacks Rank #3 makes surprise prediction inconclusive. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carrols Restaurant Group, Inc. Price and EPS Surprise

The Wendy's Company (WEN - Free Report) is slated to report financial figures on May 8. In the last reported quarter, the company’s earnings surpassed the consensus mark by 6.7%. The bottom line also outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 4.4%.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 12 cents, suggesting growth of 9.1% from the prior-year quarter number. For revenues, the same is pegged at $399.2 million, implying 4.9% improvement from the year-ago period.

Our proven model does not show that Wendy's will beat earnings estimates in this reporting cycle. The company has an Earnings ESP of -1.71% and a Zacks Rank #3.

The Wendy's Company Price and EPS Surprise

Noodles & Company (NDLS - Free Report) is scheduled to report financial results on May 9. The company’s earnings missed the consensus estimate in three of the trailing four quarters, the average miss being 54.2%.

For the first quarter, the Zacks Consensus Estimate is pegged at a loss of 5 cents compared with a loss of 4 cents incurred in the prior-year quarter. For revenues, the same is pegged at $108.9 million, indicating a 1.5% decline from the year-ago quarter’s reported figure.

Our proven model does not show that Noodles & Company is likely to beat estimates in the upcoming quarterly results. The company has an Earnings ESP of 0.00% and a Zacks Rank #5.

Noodles & Company Price and EPS Surprise

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The Wendy's Company (WEN) - free report >>

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