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4 Restaurant Companies Outperforming S&P 500 Over Past Year

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GuruFocus.com
·4 min read
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- By James Li

In light of buffet pizza chain Cici's Pizza filing for bankruptcy, four restaurant stocks that have high financial strength and have outperformed the Standard & Poor's 500 Index benchmark over the past 12 months are Chuy's Holdings Inc. (NASDAQ:CHUY), Chipotle Mexican Grill Inc. (NYSE:CMG), Texas Roadhouse Inc. (NASDAQ:TXRH) and Yum China Holdings Inc. (NYSE:YUMC) according to the All-in-One Screener, a Premium feature of GuruFocus.


Buffet pizza chain files for bankruptcy as pandemic accelerates business decline

According to CNBC, the Irving, Texas-based buffet pizza chain reported on Monday in its Chapter 11 bankruptcy protection filings that the company had between $10 million and $50 million in total assets and between $50 million and $100 million in total liabilities. The company also announced its sale to its primary lender D&G Investors, the entity that purchased $82 million of Cici's total debt during December 2020.

The news comes on the heels of global coronavirus cases topping 100 million on Tuesday, with over 25 million cases in the U.S. according to Johns Hopkins University statistics. CNBC added that while sales in take-out pizza chains like Domino's Pizza Inc. (NYSE:DPZ) and Papa John's International Inc. (NASDAQ:PZZA) increased during the pandemic, foot traffic in all-you-can-eat establishments declined on the back of increased dining restrictions and heightened cleanliness fears.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

CNBC said earlier this week that despite the milestone number of coronavirus cases, states like California and New York announced the lifting of lockdown orders, enabling businesses like restaurants and gyms to reopen on modified outdoor services. As such, investors may find opportunities in restaurant companies that have high financial strength and have outperformed the S&P 500 benchmark by over 10% during the past 12 months.

Chuy's

Shares of Chuy's (NASDAQ:CHUY) closed at $35.45, outperforming the benchmark over the past 12 months by approximately 25.11%. Despite this, the stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 1.77.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

The Austin, Texas-based company operates a full-service restaurant chain that offers a wide range of Tex-Mex food products like enchiladas, burritos and combination platters. GuruFocus ranks the company's financial strength 6 out of 10 on the back of an interest coverage ratio that outperforms over 85% of global competitors despite a modestly weak Altman Z-score of 2.69 and a debt-to-Ebitda ratio that underperforms over 77% of global restaurant companies.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

Gurus with holdings in Chuy's include Chuck Royce (Trades, Portfolio)'s Royce Investment Partners and Jim Simons (Trades, Portfolio)' Renaissance Technologies.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

Chipotle

Shares of Chipotle (NYSE:CMG) closed at $1,429.25, outperforming the S&P 500 benchmark over the past 12 months by approximately 53.98%. The stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 1.80.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

The Newport Beach, California-based company offers a wide range of fast-casual Mexican food products. GuruFocus ranks Chipotle's financial strength 6 out of 10: Even though debt ratios underperform more than half of global competitors, Chipotle has a strong Altman Z-score of 8.57 and an interest coverage ratio that outperforms over 91% of global restaurant companies.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

Gurus with holdings in Chipotle include Bill Ackman (Trades, Portfolio)'s Pershing Square and Spiros Segalas (Trades, Portfolio)' Harbor Capital Appreciation Fund.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

Texas Roadhouse

Shares of Texas Roadhouse (NASDAQ:TXRH) closed at $77.60, outperforming the S&P 500 benchmark over the past 12 months by approximately 10.39%. The stock is modestly overvalued based on Tuesday's price-to-GF Value ratio of 1.26.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

The Louisville, Kentucky-based company operates a network of over 500 casual-dining restaurants across over 45 states. GuruFocus ranks the company's financial strength 6 out of 10, driven by a strong Altman Z-score of 4.3 and an interest coverage ratio that outperforms over 76% of global competitors despite debt ratios outperforming approximately half of global restaurant companies.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

Yum China

Shares of Yum China (NYSE:YUMC) closed at $59.34, outperforming the S&P 500 benchmark over the past 12 months by approximately 15.53%. The stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 1.42.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

The Shanghai-based spinoff of Yum Brands Inc. (NYSE:YUM) operates a wide range of restaurant brands like Kentucky Fried Chicken, Pizza Hut, Taco Bell, Little Sheep and Huang Ji Huang. GuruFocus ranks Yum China's financial strength 6 out of 10 on the back of a strong Altman Z-score of 5.19 and debt ratios that are outperforming over 69% of global competitors.

4 Restaurant Companies Outperforming S&P 500 Over Past Year
4 Restaurant Companies Outperforming S&P 500 Over Past Year

Disclosure: No positions.

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This article first appeared on GuruFocus.