Are earnings disappointments in one major sector indicative of a deeper issue?
Grabbing a bite to eat with friends is one thing. But should you buy the stock of the restaurant?
For Cheesecake Factory investors, the answer is a clear no. Shares are down over 4% today as the casual dining chain disappointed Wall Street with earnings of $0.54 per share for the second quarter. Analysts were expecting $0.03 higher. The company’s topline was also $3 million shy of anticipations, coming in at $470 million.
This isn’t the only restaurant chain to leave a bad taste in the mouth of shareholders. Fast-food giant McDonald’s showed second quarter earnings of $1.38 per share, $0.02 below estimates. Panera missed earnings estimates by $0.03 while Wendy’s revenues were less than expected. However, some bright spots include Chipotle and Domino’s Pizza.
Are restaurant disappointments indicative of a deeper, underlying economic problem in the United States?
Talking Numbers contributor Enis Taner, Global Macro Editor at RiskReversal.com, says yes and, in the video above, explains why. Meanwhile, JC O’Hara, Chief Market Technician at FBN Securities, gives the charts on one restaurant stock he thinks you should avoid.
To see Taner and O’Hara analyze restaurant stocks, watch the video above.