Posts by Chris Nichols
- Chris Nichols at The Exchange2 days ago
The initially euphoric reaction in off-hours trading to Krispy Kreme's (KKD) latest earnings report abated once the regular session got underway, though volume was considerably heavier than normal in the doughnut seller. After climbing more than 10% following Wednesday's close, and remaining strong ahead of Thursday's open, the stock recently settled back to a gain of 1.4%, at $20.16. For a time, it was even negative for the day amid what has become a broad stock selloff. In later afternoon trade, 4.5 million shares of Krispy Kreme had changed hands, roughly quadruple the average amount for a full day. Part of that action, as well as the now-gone advance, may be from short sellers covering a portion of their position, which measured about 9.9% of Krispy Kreme's float at the end of February. Just after Krispy Kreme reported, it looked as if a trend of significant post-earnings moves would continue. Though the five-year bull market has levitated many a stock, and the restaurants have shown an incredible ability to surge even amid muted traffic and cautious consumer spending, the jump in Krispy Kreme seemed perhaps outsized. Although it raised its fiscal 2015 forecast to a profit of 73 cents to 79 cents, from 71 cents to 76 cents previously, the company acknowledged the improvement will get an assist from stock buybacks that are reducing the share count (Krispy Kreme's repurchase ability was increased by $30 million to a total of $80 million). That's long been a quick way for companies to prop up earnings per share without actually having to create more net income. However, in fairness to Krispy Kreme, it said it would probably earn $32.4 million to $34.8 million in 2015, up from the prior band of $31.3 million to $33.6 million. In any event, a guidance bump-up without the buyback factor may have led to a more sustained elevation.
- The Exchange3 days ago
If the recent pattern holds, the negligible move in Krispy Kreme's (KKD) stock price Wednesday represents the last hours of calm before its earnings report leads to a massive shift.
In four of the past five quarters, shares of the Winston-Salem, N.C., doughnut and coffee chain have moved at least 15%, with two up days and two down, following the reporting of its results. The outlier was a relatively pedestrian 2.7% decrease in the fourth quarter of 2012. Ahead of the upcoming report, it was adding 0.8% at $19.56.
- The Exchange4 days ago
Short sellers have been building an ever-larger position in pizza chain Papa John's (PZZA) over the past several months, an accumulation that measures as the third-biggest percentage increase among 42 publicly traded restaurant stocks examined.
According to data available on Nasdaq.com, the number of shares in Papa John's sold short totaled 1.64 million as of Feb. 14, up 173.7% since the middle of last March. The spike is particularly apparent back to this past October, when short interest surged from 453,903 shares to 857,568 shares in a two-week span. It's trended upward ever since for the No. 3 U.S. pizza chain by unit count, with only barbecue seller Famous Dave's (DAVE) and sandwich shop Potbelly (PBPB), public less than half a year, showing a more pronounced change of all the restaurants surveyed.
- The Exchange8 days ago
If it isn't the pinnacle for American sandwich shops, it's certainly a time of plenty.
Despite uneven results for restaurant chains in these days of dollar-conscious consumers, a fact belied by last year's market performance for the industry, sandwich sellers have continued to proliferate. That's been true for the likes of Jimmy John's, Firehouse Subs, Jersey Mike's, Panera Bread (PNRA), McAlister's Deli and the biggest of them all, with more than 40,000 units, Subway. Competition and economic uncertainty be damned.
The polar opposite has been the case at Quiznos. Here, it's a story of burdensome debt, along with a sour relationship with its store owners, and The Wall Street Journal has reported a bankruptcy filing is likely approaching. The development makes the sandwich seller stand out not only for its financial struggles but for the fact that its decline has come amid a period of impressive expansion for many of its peers.
- The Exchange16 days ago
There's nothing wrong with scooping up shares of growth companies and setting high expectations for them, but the slump Thursday at Noodles & Co. (NDLS) is yet another reminder that Wall Street's generosity can be vastly excessive and its punishment swift.
Although the Broomfield, Colo.-based Pad Thai and spaghetti seller still has tremendous prospects, stationed as it is in the ballyhooed fast-casual restaurant subset, it's also stayed overheated in a super-hot industry that significantly outperformed the market last year. That's the case even with what's been a muted showing for Noodles since its stock debut in mid-2013.
Recently, the shares were losing 6.8% to $36.87, the fourth-worst day in its brief trading history, as its financials weren't a match for the goals outsiders have set. In the fourth quarter, Noodles earned 11 cents a share on revenue of $91.5 million, a top-line increase of 17.5% from the same period a year earlier. Analysts surveyed by FactSet were looking for a profit of 12 cents and revenue of $92.1 million, so Noodles missed on both.
- The Exchange18 days ago
For McDonald's (MCD), the Mighty Wings have gone to the bargain bin, relatively speaking.
After tepid sales during a promotion late last year left the company with what The Wall Street Journal reported was 10 million pounds of unsold wings, the restaurant operator is back with a pricing cut that's meant to remove the excess.
- The Exchange23 days ago
The massive, multi-year rally in Conn's (CONN) was taking a major hit Thursday, as the furniture and electronics retailer cut its forecast and talked of troubles in its credit division, sending shares tumbling more than 30%.
On a preliminary basis, Conn's said fourth-quarter sales and earnings will badly lag analysts' consensus, a disclosure that pushed the stock as far down as $35.10, a 37% drop from the previous close. Recently, the stock was diving 31.9% to $38, and it's in position to record the worst session in its 10-plus-year trading history. For now, that belongs to a 33.4% slump on Oct. 20, 2009.
For the quarter, revenue rose nearly 45% to $301.6 million, of which $275.4 million came from product sales. Same-store sales were up 33.4% from last year. At the same time, earnings will be 75 cents to 80 cents a share, excluding a gain of a penny a share. Compared with what Wall Street anticipated, that's a disaster. Currently, the revenue estimate is above $360 million, whereas profits should have been 93 cents in order to meet the target.
- The Exchange24 days ago
The short and so far disastrous public run for Potbelly (PBPB) was continuing Wednesday, as shares of the sandwich seller slumped following its second earnings report since its market debut last fall.
In recent trading, Potbelly was dropping more than 10% to to $20.10, mere pennies above the lowest level it hit on the session. That meant it was achieving two inglorious milestones simultaneously — having the biggest single-day decline in its history and sliding to the worst price it's seen post-initial public offering.
- The Exchange25 days ago
If Panera Bread (PNRA) succeeds in beating Wall Street's fourth-quarter sales expectations, it will do so with the strongest quarter-over-quarter growth it's seen in at least five years. The last few months haven't always been kind to the St. Louis-based sandwich and pastry seller, which has previously lowered its financial targets, and yet, analysts are still looking for a 15.3% climb in the top line, vs. the third quarter, when Panera reports its numbers after the close Tuesday. According to FactSet, the company is set to earn $1.94 a share on revenue of $660.3 million. Should it beat projections on sales, it would bring to an end four consecutive shortfalls and also mark a 15.5% improvement from the fourth quarter of 2012. Same-store sales, however, are predicted to be up 1.2%, the slowest year-over-year climb since the second quarter of 2009, FactSet data show, and down from the 1.7% pace of the third quarter. Whether it meets, exceeds or misses the forecasts, it's important to note Panera makes money and it brings in revenue. What's happened of late, though, is the number of transactions has been retreating, a serious concern it has to get rectified. This fact has been attributed in large measure to the inability of stores to get diners in and out quickly, cutting into sales as some customers walk away or simply look for alternatives. Being a public company, Panera can't afford for that to go on. It's a member of the fast-casual set, like Chipotle (CMG), that's coveted by analysts, investors and a segment of the eating-out public. But it's ultimately a soup and sandwich shop, one that's expanded sharply in recent years with its pronouncements of better-for-you food such as artisan rolls and chicken that's not treated with antibiotics. And it's done so thanks to visitors who have proven willing to pay the high price for a Panera lunch, allowing it to increase its locations (roughly half of which are franchised) and keep its cost structure in fine shape at the same time. That said, the downturn in traffic is a clear trouble sign, because ever-pricier items alone can't be a sound forever strategy to prop up sales. As the chart below shows, Panera has maintained its ability to raise check levels year over year, via a combination of higher prices and consumers opting for more-expensive fare when they're in the store. The rate of transaction growth, meanwhile, has been slowing, and through the first nine months of 2013, was negative. In other words, fewer checkout instances are being recorded this year than last.
- The Exchange1 mth ago
Whole Foods Market (WFM) was selling off Thursday as a modestly disappointing projection prompted a panicked reaction regarding the grocer's growth, which is being called into question as it fights the stoutest enemy of all -- itself.
Shares of the Austin, Texas-based chain, known for organic foods and its stance against artificial flavors, slumped as much as 8.3% to $50.88 in recent trading on word the top end of its sales goal probably wouldn't be achieved this year. The selling had conviction, with volume roughly four times that of a normal full day only two hours into the session.
Whole Foods has definitely had some stumbles. But the magnitude of the takedown may be harsh, all things considered.