Bull of the Day: Habit (HABT)
The Habit Restaurants, Inc. (HABT) surprised the Street with strong comparable sales in the first quarter. This Zacks Rank #1 (Strong Buy) is expected to grow revenue by double digits in 2019.
Habit Restaurants operates 255 Habit Burger Grills in 11 states and 5 international locations. Founded in Santa Barbara, California in 1969, it specializes in made-to-order chargrilled burgers and sandwiches featuring USDA choice tri-tip steak, grilled chicken and sushi-grade tuna cooked over an open flame.
An Earnings Beat in Q1
On May 1, Habit reported its first quarter results and beat the Zacks Consensus Estimate by 3 cents. Earnings were a loss of $0.01 compared to the Zacks Consensus of a loss of $0.04.
Revenue jumped 17.6% to $108.2 million from $91.9 million in the year ago quarter.
Company-operated comparable restaurant sales rose 3.2% as compared to the first quarter of 2018. 230 restaurants, out of the total of 255, are company-operated.
The increase in comparable restaurant sales was driven mostly by a 7.4% increase in average transaction amount partially offset by a 4.2% decrease in transactions.
Raised Full Year Guidance
Given that the first quarter was stronger than expected, the company raised its full year revenue and comparable restaurant sales guidance.
Revenue is now expected in the range of $460.5 million to $464.5 million up from the prior guidance of $458 million to $462 million.
The Sales Consensus is currently calling for $462 million, which is a gain of 15% from 2018 which saw sales come in at $402.1 million.
Comparable restaurant sales are now forecast to be 2.5% to 3.5%, up from prior guidance of 2% to 3%.
Analysts Raise Estimates
The analysts like what they heard and are bullish on the company.
3 estimates were revised for 2019 since the earnings report which has pushed the 2019 Zacks Consensus Estimate up to $0.13 from the prior consensus of $0.10.
However, this is still below the $0.17 the company made in 2018.
1 estimate was also raised for 2020 but the Zacks Consensus remains unchanged at $0.11.
Shares Jump on the News
Habit went IPO in 2015 as many restaurant chains were going IPO, but the shares, while hot in the beginning, have sold off by 65%.
However, this quarter's better-than-expected comparable restaurant growth boosted the shares, which have jumped 21% year-to-date.
Shake Shack (SHAK), one of Habit's competitors, also reported strong first quarter comparables.
Seems like burgers may be coming back into vogue with consumers.
Habit is trading at 93x forward earnings, so you are buying the growth story.
For investors who are looking for a growing restaurant chain, Habit is one to keep on your short list.
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