Yahoo Finance The Zacks Analyst Blog Highlights Chipotle Mexican Grill, McDonald's, Starbucks and BJ's Restaurants
For Immediate Release
Chicago, IL – April 24, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Chipotle Mexican Grill, Inc. CMG, McDonald's Corp. MCD, Starbucks Corp. SBUX and BJ's Restaurants, Inc. BJRI.
Here are highlights from Friday’s Analyst Blog:
4 Restaurant Stocks Poised to Deliver Earnings Beats in Q1
Restaurant companies’ top line in first-quarter 2023 is likely to have benefited from the rapid increase in menu prices, average check growth and expansion efforts. The industry participants are also benefiting from partnerships with delivery channels and digital platforms. An increase in off-premise sales, which primarily include delivery, takeout, drive-thru, catering, meal kits and off-site options, such as kiosks and food trucks are also aiding the top line.
Most restaurant operators are also gaining from the implementation of ghost or virtual kitchens. The idea of providing off-premise offerings and a connected curbside service is steadily garnering positive customer feedback.
Industry players’ bottom line in the quarter is likely to have been hurt by high wages and food cost inflation. The industry is persistently bearing increased expenses, which have been affecting margins. Higher pre-opening costs, marketing expenses and costs related to sales-boosting initiatives are exerting pressure on the company’s margins. The rise in meat and seafood costs, including ribs, prime rib, ribeye and tri-tip and salmon, is hurting the industry.
The latest Earnings Trend report suggests that the Zacks Retail-Wholesale sector’s first-quarter earnings are expected to decline 5.9% from the year-ago period’s reported figure. The previous quarter witnessed a 29% decline. The sector’s revenues are projected to increase 4% compared with 6% reported in the previous quarter. However, margins are expected to decline 0.4%.
Let us discuss the factors that might have played a key role in shaping the performance of the restaurant stocks in the third quarter.
How to Make the Right Pick?
Given the wide range of companies in this space, the task is by no means easy. While it is impossible to be sure of the outperformers, our proprietary methodology — a positive Earnings ESP along with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — makes it relatively simple. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for identifying stocks with high chances of delivering a surprise in their upcoming earnings announcements. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with the above-mentioned combination, chances of a positive earnings surprise are as high as 70%.
Our Choices
Here are a few restaurant companies that investors can check out.
Chipotle Mexican Grill, Inc. is scheduled to release first-quarter 2022 results on Apr 25. CMG currently has a Zacks Rank #3 and an Earnings ESP of +1.48%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chipotle's first-quarter performance is likely to have benefited from robust digital sales, an increase in menu prices and new restaurant openings. Robust comp growth and food and beverage revenues are likely to have aided the company’s performance in the quarter under review.
We expect food and beverage revenues to increase 15.2% year over year to $2,303.2 million. However, delivery service revenues are expected to be $20.7 million, down 4% year over year.
The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at $8.89 per share, suggesting growth of 56% from $5.70 reported in the prior-year quarter.
Chipotle Mexican Grill, Inc. price-eps-surprise | Chipotle Mexican Grill, Inc. Quote
McDonald's Corp. is scheduled to report first-quarter 2023 results on Apr 25, before the opening bell. MCD currently has a Zacks Rank #3 and an Earnings ESP of +1.48%.
McDonald's revenues are likely to have been affected by dismal international operated markets revenues. Although MCD’s performance in China is likely to have improved sequentially, a softening economy and COVID-19-related government restrictions continue to hurt the company. Our model predicts international operated market revenues to decline 15.9% year over year to $1,245.6 million.
However, robust digitalization, menu innovation, expansion efforts and strong comps are likely to have aided the company’s U.S. segment’s performance. We expect total U.S. segment revenues in first-quarter 2023 to be up 4.2%, year over year. Per our model, U.S comps are to improve 1.1% driven by increases in average check growth and menu price.
The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at $2.30 per share, suggesting growth of 0.9% from $2.28 reported in the prior-year quarter.
McDonald's Corporation price-eps-surprise | McDonald's Corporation Quote
Starbucks Corp. is slated to report second-quarter fiscal 2023 results on May 2, 2023 after the closing bell. SBUX currently has a Zacks Rank #3 and an Earnings ESP of +1.48%.
The company is likely to benefit from robust North America sales, expansion efforts and digital sales. Despite unfavorable economic conditions, Starbucks is focusing on expansion efforts. However, its performance continues to be negatively impacted by dismal China results, higher-than-expected inflationary pressures, increased costs and a tight labor market.
The Zacks Consensus Estimate for second-quarter fiscal 2023 earnings is pegged at 64 cents per share, suggesting growth of 8.5% from 59 cents reported in the prior-year quarter.
Starbucks Corporation price-eps-surprise | Starbucks Corporation Quote
BJ's Restaurants, Inc. is scheduled to report first-quarter 2023 results on Apr 27, 2023. BJRI currently has a Zacks Rank #3 and an Earnings ESP of +130.77%.
BJ's Restaurants’ first-quarter top line is likely to have been aided by robust comparable restaurant sales growth and technology-driven initiatives. Our model predicts comparable restaurant sales growth of 8.2%, aided by a rise in the dining room guest traffic and incremental menu pricing.
BJ's Restaurants, Inc. price-eps-surprise | BJ's Restaurants, Inc. Quote
BJRI has been gaining from its new restaurant openings in Las Vegas and Nevada. The restaurant’s remodel initiatives have provided continuous growth in sales and investment prospects.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
