Sat, Mar. 7, 10:13 AM
- A powerhouse quarter of improved comps and widened margins is in the books for the restaurant industry as investors look forward to see if the trend extends.
- The industry is in a growth phase with eating and drinking establishments adding 58.7K jobs in February on a seasonally adjusted basis to mark the biggest monthly gain since December of 2012.
- The early read on Q1 traffic is favorable (ex-weather), although chains could see some wage inflation pressure and innovation outlays with differentiated concepts popping up at Habit Restaurants (NASDAQ:HABT), Zoe's Kitchen (NYSE:ZOES), Shake Shack (NYSE:SHAK), and a host of others.
- Major digital initiatives at chains such as Panera Bread (NASDAQ:PNRA) and Starbucks (NASDAQ:SBUX) also have the potential to be disruptive.
- A few screens to pick through the restaurant stock menu are listed below.
- Lowest forward P/E ratio: McDonald's (NYSE:MCD), Ruth's Hospitality (NASDAQ:RUTH), and Cracker Barrel (NASDAQ:CBRL).
- Lowest price/free cash flow ratio: Ruby Tuesday (NYSE:RT), Nathan's (NASDAQ:NATH), Jack in the Box (NASDAQ:JACK).
- Dividend yield +3%: DineEquity (NYSE:DIN), Darden Restaurants (NYSE:DRI), McDonald's, and Arcos Dorados (NYSE:ARCO).
- Top YTD performers: Jack in the Box (JACK), Wendy's (NASDAQ:WEN), Sonic (NASDAQ:SONC), El Pollo LoCo (NASDAQ:LOCO).
- PEG ratio below 2.00: Chuy's Holdings (NASDAQ:CHUY), Ruth's Hospitality, Krispy Kreme Donuts (NYSE:KKD), Cheesecake Factory (NASDAQ:CAKE), Brinker International (NYSE:EAT), Denny's (NASDAQ:DENN), Buffalo Wild Wings (NASDAQ:BWLD).
- Short ratio below 2%: Yum Brands (NYSE:YUM), Jack in the Box (JACK), Chipotle (NYSE:CMG), DineEquity, Bloomin' Brands (NASDAQ:BLMN), Denny's (DENN), McDonald's (MCD).
- Previously: Restaurant stocks continue hot streak (Feb. 24)
Thu, Feb. 12, 9:43 AM
- The read on retail sales in the U.S. isn't nearly as bad as the headline -0.8% M/M drop for January.
- Retail sales were up 3.3% compared to a year ago with a few sectors showing strong growth.
- Restaurant sales +11.3% Y/Y: The strong read follows up on a positive report from Black Box Intelligence on the sector. CAKE, CBRL, CMG, DPZ, DRI, EAT, JACK, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, BDL, NATH, LUB, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN, HABT, NDLS, PLKI, LOCO, YUM, KKD, TAST, GTIM, FRSH, COSI, FRS, PBPB, FRGI, QSR, CBRL, BLMN, ZOES.
- Sporting goods +8.0% Y/Y: DKS, BGFV, CAB, HIBB, SPWH.
- Building material and garden +6.9% Y/Y: A favorable weather compare came to the aid of this category. HD, LOW, LL.
- Health and personal care +6.6% Y/Y: Online channels have contributed for companies selling beauty and health items. ULTA, SBH, CVS, WBA, RAD.
Wed, Feb. 11, 10:37 AM
- Chain restaurants recorded their strongest pace of same-store sales in six years during January at 6.1%, according to data from Black Box Intelligence.
- An easier weather compare, $2 gas, and a more stable economic backdrop were factors.
- Traffic was up 2.4% during the month.
- The sales lift was delivered without much help from McDonald's which saw a marginal +0.4% comp gain.
- Comp sales in the Midwest improved 11.2% after the region had a much easier time with weather during January than a year ago.
- Chains with a large focus in the Midwest include Steak 'n Shake (NYSE:BH), Jimmy John's, Culvers, and Bob Evans (NASDAQ:BOBE).
- Restaurant stocks: CAKE, CBRL, CMG, DPZ, DRI, EAT, JACK, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, BDL, NATH, LUB, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN, HABT, NDLS, PLKI, LOCO, YUM, KKD, TAST, GTIM, FRSH, COSI, FRS, PBPB, FRGI, QSR, CBRL, BLMN, ZOES.
Fri, Feb. 6, 2:45 PM
- Argus analyst John Staszak thinks investors have overreacted by knocking 9% off Chipotle Mexican Grill’s (CMG -1.4%) stock price since the Q4 earnings report.
- In maintaining his Buy rating, the analyst notes that CMG posted generally strong sales in the quarter, and that its 17.6% operating margin is still about double that of many restaurant chains.
- While CMG’s valuation multiples remain high, Stasnak believes the current share price inadequately values prospects for strong same-store sales and the company’s aggressive unit expansion plans, and raises his stock price target to $780 from $750.
Thu, Feb. 5, 11:12 AM
- The IPO action on Grilled Cheese Truck (OTCQB:GRLD) looks a bit like a sign of a bull market top, according to Barry Ritholtz.
- His case seems rather compelling.
- Grilled Cheese Truck trades with a $107.4M market cap off of 9-month revenue of $2.6M and assets of $1M.
- The company looks like it provides a great service in the L.A. area and even has the 4 trucks to prove it.
- On a broader scale, some names in the restaurant sector have been identified by analysts as looking frothy.
- Habit Restaurants (NASDAQ:HABT), Shake Shack (NYSE:SHAK), Zoes Kitchen (NYSE:ZOES), Chipotle (NYSE:CMG), Potbelly (NASDAQ:PBPB), and Noodles (NASDAQ:NDLS) have all heard the take.
Wed, Feb. 4, 2:49 PM
- Chipotle (CMG -6.5%) disclosed during its earnings call that it doesn't expect to raise menu prices broadly in 2015.
- The company will add a surcharge on steak and barbacoa items if beef input costs remain elevated.
- Chipotle's price hike last year helped boost its average ticket by 8.3% in Q4.
- The company says new concepts ShopHouse Southeast Asian Kitchen and Pizzeria Locale are still in the early stages.
- Though Chipotle is seeking to develop the new chains, most of the company's growth for the foreseeable future is tied to the namesake brand.
- Previously: Chipotle -6.1% after comp growth slowdown guide (Feb. 3)
- CMG earnings call transcript
Wed, Feb. 4, 9:27 AM
- Goldman Sachs reiterates a Buy rating on Chipotle (NYSE:CMG).
- The investment firm sees an over-reation to the inevitable slowdown of comps at Chipotle in 2015.
- The fast-casual chain is bumping up against strong comps of 13.4%, 17.3%, 19.8%, and 16.1% over the next four quarters.
- Previously: Chipotle Mexican Grill beats by $0.05, revenue in-line (Feb. 03 2015)
- Previously: Chipotle -6.1% after comp growth slowdown guide (Feb. 03 2015)
- CMG -6.6% premarket.
Wed, Feb. 4, 9:13 AM
Tue, Feb. 3, 5:37 PM
Tue, Feb. 3, 4:12 PM
- Chipotle (NYSE:CMG) reports comparable-store sales rose 16.1% in Q4.
- Analyst estimates for comp sales ranged from 14% to 17%.
- Restaurant level operating margin +100 bps to 26.6% as sales leverage kicked in.
- Food cost ratio +110 bps to 35.0%.
- Store count +60 Q/Q to 1,783.
- Guidance: Chipotle's comp growth projection of a low to mid-single digit rate trails the 8% consensus estimate.
- CMG -6.1% after-hours.
Tue, Feb. 3, 4:03 PM| 4 Comments
Tue, Feb. 3, 11:15 AM
- The integration of mobile ordering is a major theme in the restaurant industry this year.
- Starbucks (NASDAQ:SBUX) and Domino's Pizza (NYSE:DPZ) have raised the bar the highest, while peers have gone into chase mode.
- Today, Wendy's (NASDAQ:WEN) reported a significant 3% sales lift in a 35-unit test run of an app order/dedicated drive-through program (h/t Barbarian Capital, Wendy's Investor Day webcast ).
- Two companies struggling with their drive-through windows due to kitchen complexity, Panera Bread (NASDAQ:PNRA) and McDonald's (NYSE:MCD), have their eyes on in-store ways to boost sales. In the case of McDonald's, the plan is to use self-order kiosks.
- Chipotle (NYSE:CMG) reports Q4 results after the bell today where there will be a focus on if the company's new mobile app had any impact on pick-up orders.
Mon, Feb. 2, 5:35 PM
Thu, Jan. 29, 2:02 PM
- Chipotle (CMG +0.5%) is still attractive near all-time highs, according to a take from Oppenheimer.
- The investment firm thinks Street estimates factor in a slowdown in comps and reasonable margin growth which should sentiment as certain metrics retreat.
- Here's what Chipotle is running up against this year as it reports comparable-store sales growth: Q4 2013 +9.3%, Q1 2014 +13.4%, Q2 2014 +17.3%, Q4 2014 +19.8%.
- Shares of the restaurant chain are rated by Oppenheimer at Outperform with a $775 price target.
Fri, Jan. 23, 11:25 AM
- Analysts note McDonald's is not a bellwether stock for the restaurant industry anymore as the sector has many more names putting in gains today than losses despite the poor sales report from the Golden Arches.
- The quick (and perhaps obvious) take from within the sector is that chains sticking with a simple laser-focused message are winning out. Chipotle, Wendy's, and Domino's all fit that description.
- The copycat approach of McDonald's (McCafe, wings, premium burgers) and Olive Garden (prior to Starboard) hasn't worked, while a measured pace to expansion in new markets has also paid off (Starbucks vs. KFC).
- Previously: Restaurant comps ignited off of $2 gas effect (Jan. 09 2015)
- Previously: $2 gas little help to McDonald's in Q4 (Jan. 23 2015)
- Restaurant stocks: CAKE, CBRL, CMG, DPZ, DRI, EAT, JACK, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, BDL, NATH, LUB, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN, HABT, NDLS, PLKI, LOCO, YUM, KKD, BOBE, TAST, GTIM, FRSH, COSI, FRS, PBPB, FRGI, QSR, CBRL, BLMN, MFRD, ZOES, MCD, YUM.
Thu, Jan. 15, 12:56 PM
- There's debate on if Chipotle's (CMG -1.6%) decision to pull pork from its menu is smart corporate policy or a warning on future meat supplier issues.
- The company will face more costly supplier issues in the future as it grows, reasons The Washington Post's Roberto Ferdman.
- The take from the WP is discounted heavily by Politco as it leans on industry experts who seen a net boon from the development.
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