Posts by Chris Nichols
- Chris Nichols at Yahoo Finance5 days ago
When it comes to corporate drama, the ongoing fight between Darden Restaurants (DRI) and activist investors is about as compelling as it gets. It has also created an extremely dangerous place for individual investors to be.
Powerful forces have dug in deep on both sides of the wall, with well-known institutions building their holdings on the long side and a short position that surged months ago persisting throughout the year, making this a hazardous venture for regular folks.
Darden's second-biggest shareholder, Starboard Value LP, is the problem -- or the solution, depending on one's perspective. But it's at the center of it all right now, wielding considerable influence over the future direction of the Orlando, Fla.-based owner of Olive Garden and LongHorn Steakhouse. Owning 8.8% of Darden's stock, Starboard has been on the attack for months, criticizing management and bidding to replace the entire board.
- Chris Nichols at Yahoo Finance6 days ago
The publicly traded restaurant group is likely to have two more names for investors to ponder in the months ahead, one a returnee and another that will undoubtedly be met with -- yes -- talk of its "next Chipotle" potential.
As for the first, it's Dallas-based Dave & Buster's, partly a restaurant and bar, partly a game center, which Oak Hill Capital Partners is taking public after an eight-year removal from the market. It's announced definite plans for an IPO after previously withdrawing an earlier filing to do the same.
However, the second -- still in the expected, not formally filed, phase -- will generate greater excitement by far. It's New York-based Shake Shack, one of the "better burger" chains that, along with the likes of In-N-Out and Smashburger, is drawing burger fans who want something other than fast food.
- Chris Nichols at Yahoo Finance11 days ago
Chipotle (CMG) has never wanted to be a traditional fast-food restaurant. It's wanted to be viewed as better -- in terms of quality, ingredients, taste, supplier practices and just about everything else.
Recently, co-CEO Montgomery Moran told TheStreet.com the Denver-based burrito seller believes fast food is "going away," because Chipotle "and others like us" are remaking the chain-restaurant industry in the fast-casual, food-with-a-conscience, slightly pricier manner. "Our mission is to change how people eat fast food," he said.
Moran believes building more Chipotles, getting customers to care about workplace issues, welcoming competitors who copy Chipotle's philosophy and convincing suppliers to alter production methods are among the factors that will drive this change. Chipotle supporters will applaud, hoping the day is near when fast food as we know it vanishes. Others will find this preaching from a chain that thinks it knows better than you.
- Chris Nichols at Yahoo Finance23 days ago
After reaching an all-time high and an outsized valuation, Williams-Sonoma (WSM) needed to get everything right with its latest earnings report and outlook. It didn't.
But the degree of selling in the shares following an entirely common event for the high-end home-goods retailer -- issuing conservative guidance that's below Wall Street's estimates -- is arguably overdone. Recently Thursday, the stock was down 10.7% to $66.85, on seven times normal volume, following a third-quarter forecast that failed to meet analysts' consensus.
The idea of being "priced for perfection" is as old as trading, and undoubtedly Williams-Sonoma, with its stellar post-financial meltdown run, was just that, on Wednesday rocketing as high as a record $75.69. Many important valuation measures were ahead of their five-year average readings, including a forward price-to-earnings ratio of 21.9, compared with the normal 18.5, and the P/E-to-growth ratio of 1.6 vs. 1.4.
- Chris Nichols at Yahoo Finance25 days ago
Any time an industry has a potentially transforming merger, the question arises as to whether it's the first of many. Such is the case now for restaurants, as Miami-based Burger King (BKW) and Canada's Tim Hortons (THI) pursue a merger to create a burger, coffee and pastries seller with a current combined market cap of $22 billion.
But within the group, other compelling takeover candidates arguably are few in number, with only a handful appearing both reasonably affordable and of a style that could quickly -- conceivably -- enhance the prospects of an acquirer.
- Chris Nichols at Yahoo Finance26 days ago
Though it isn't remotely on the scale of the potential merger of Burger King (BKW) and Tim Hortons (THI), Buffalo Wild Wings (BWLD) has made another smart investment outside its core offering of hot chicken wings, taking a majority stake in a small Dallas-based taco chain.
Buffalo Wild Wings didn't disclose financial terms, but said Monday it's invested in Rusty Taco, a nine-store operation that opened its first location in 2010. Beyond Dallas, Rusty Taco has stores in Denver, a market popular with chains and home to Mexican-style fast-casual restaurant Chipotle (CMG), and the Minneapolis-St. Paul area, where Buffalo Wild Wings is based.
- Chris Nichols at Yahoo Finance29 days ago
After outpacing the overall market for each of the past five years, Popeyes Louisiana Kitchen (PLKI) may have finally run its course. And that's not just because it declined following a quarterly earnings report that contained nothing alarming.
Of course, if it has hit the runner's wall, it only means the 2,262-store Atlanta-based chicken seller is joining the club of so many publicly traded restaurants that have fallen out of favor with investors in 2014. Popeyes stock lost more than 3% on Thursday from Wednesday's close, following the after-hours earnings report. The dip was almost certainly because Popeyes shares — along with those of a large number of other food-service companies — had gotten overvalued. On Friday the stock is essentially flat in midday trade, at $39.26.
Fast food chain El Pollo Loco (LOCO) was having one of the worst days in its newly public history Tuesday, dropping nearly 10% after it became clear Wall Street thinks the shares have gotten overvalued.
Among new ratings Tuesday, Stifel Nicolaus and Jefferies issued holds, while William Blair set a buy on the stock. In recent trading, it was down $3.28 to $29.91. At the moment, analysts have what amounts to a $31 consensus price on the stock, according to FactSet.
IPOs, of course, often surge to great heights in their early days (they also often retreat, sometimes fast). In the case of El Pollo Loco, it was buoyed in its initial sessions by hopes investors would be purchasing stock in a company that could follow Chipotle's (CMG) extremely successful store expansion and price gains in the market. Though multiple disappointments have been found along that path, buyers can't seem to pass up the chance for fear they'll miss a winner.
It's not typical for nationwide buzz to accompany a Taco Bell restaurant opening. But when it's Taco Bell's new store, U.S. Taco Co., a higher-scale eatery whose first location is now operating, it starts to make some sense. And when considering this particular store is at the center of what's working awfully well for chain restaurants these days, it makes a great deal more.
While U.S. Taco borrows from elements of Mexican and Tex-Mex cuisine, its leadership wants to focus messaging on the menu's attempts to reinvent the "best regional dishes" from America. Lobster, Mahi Mahi, pulled pork and brisket are among the centerpiece items decorated with poblano sauces, jalapenos and salsas, all on a tortilla, sold mostly in the $3 to $4 range each.
Red Robin Gourmet Burgers (RRGB) was having one of the worst trading days in the stock's history Thursday, slumping to a 52-week low after a terrible quarterly report and further putting its five-year market winning streak in doubt.
The Greenwood Village, Colo., burger chain recently was down $13.63 at $50.92. On a percentage basis, the 21.1% drop would be its fourth-largest in a session going back to 2002. Earlier in the day, it was at $50.50. Meanwhile, two hours into trading, volume was 15 times higher than average.
At this point, Red Robin's stock has lost 30% in 2014. That's a major turnaround for shares that haven't had a negative year since 2008 and that last year surged 108%. However, as is the case with many restaurants that rallied in 2013 -- more than 50% for a broad group Yahoo Finance tracks -- the new year has been much more subdued. For stocks such as Red Robin, which peaked at $86.83 in November, it's been downright awful.