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Chipotle, McDonald’s more appetizing than Street thinks

It’s restaurant week on Wall Street. Some of the nation’s largest fast food chains report this week including Yum Brands (YUM) on Tuesday, Chipotle (CMG) also on Tuesday and McDonald’s (MCD) on Wednesday.

Will investors have an appetite for any or all of these stocks after the numbers come out? “We’re expecting beats on all three,” said Christine Short of Estimize, a company that crowdsources estimates from both professional analysts as well as private investors.

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Looking at McDonald’s, “we expecting $1.11 per share,” said Short. “That’s more than what the Street is expecting.” Given that growth has slowed and that McDonald’s has struggled with quality concerns in China, the estimates suggest McDonald’s may have been successful in its attempts to stem some of these issues.
“We’re seeing them also try to compete with breakfast all day long,” Short added. “They are the winner in the space. It’s their most popular time of day.”

Turning attention to Yum! Brands, “this company gets more than half of their revenues from China,” said Short, and with the economy in China slowing, some investors fear Yum! May disappoint. However, estimates from Estimize are positive. “We’re expecting Yum to beat, narrowly, by 4 cents.” “They’re also offering breakfast items at Taco Bell and they have new offerings at the Pizza Hut stores. Also, they’re revamping online ordering and they’re investing in digital marketing,” Short said.

In the space, Chipotle is clearly the high flier with shares 32% higher over the past year. “We’re expecting a big beat here, too,” Short said. “They’re going to have some food pricing issues but traffic is very good.”

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