Chuy's (NASDAQ:CHUY) Reports Q4 In Line With Expectations But Stock Drops
Casual restaurant chain Chuy’s (NASDAQ:CHUY) reported results in line with analysts' expectations in Q4 FY2023, with revenue up 11.8% year on year to $116.3 million. It made a non-GAAP profit of $0.45 per share, improving from its profit of $0.27 per share in the same quarter last year.
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Chuy's (CHUY) Q4 FY2023 Highlights:
Revenue: $116.3 million vs analyst estimates of $116.6 million (small miss)
EPS (non-GAAP): $0.45 vs analyst estimates of $0.38 (18.1% beat)
EPS (non-GAAP) guidance for 2024: $1.85 at the midpoint vs analyst estimates of $1.93 (4.4% miss)
Gross Margin (GAAP): 21.4%, up from 18.4% in the same quarter last year
Same-Store Sales were up 0.3% year on year (miss vs. expectations of up 0.7% year on year)
Store Locations: 101 at quarter end, increasing by 3 over the last 12 months
Market Capitalization: $580.3 million
Steve Hislop, President and Chief Executive Officer of Chuy’s Holdings, Inc. stated, “I am proud of what our team accomplished in 2023 with continued revenue growth of 9.3% and comparable restaurant sales of approximately 3.3%. Our effective four-wall execution resulted in a 200 basis-point expansion of restaurant-level margins to over 20% representing our best result in over a decade, excluding the covid-impacted 2021, and among the best in the industry. As we look ahead, we will continue to do what we do best – provide our customers with fresh, made-from-scratch food and drinks at an incredible value. Finally, we were thrilled to return approximately $28.9 million to shareholders during the year through share repurchases enabled by the ongoing strength of our operating model.”
Known for its ‘Big As Yo' Face’ burritos, Chuy’s (NASDAQ:CHUY) is a casual restaurant chain that specializes in Tex-Mex fare, which combines elements of traditional Mexican cuisine with Southern American cooking.
Sit-Down Dining
Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.
Sales Growth
Chuy's is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale.
As you can see below, the company's annualized revenue growth rate of 2% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was weak , but to its credit, it opened new restaurants and grew sales at existing, established dining locations.
This quarter, Chuy's revenue grew 11.8% year on year to $116.3 million, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 4.3% over the next 12 months, a deceleration from this quarter.
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Same-Store Sales
Chuy's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 4.1% year on year. With positive same-store sales growth amid an increasing number of restaurants, Chuy's is reaching more diners and growing sales.
In the latest quarter, Chuy's year on year same-store sales were flat. By the company's standards, this growth was a meaningful deceleration from the 3.4% year-on-year increase it posted 12 months ago. We'll be watching Chuy's closely to see if it can reaccelerate growth.
Key Takeaways from Chuy's Q4 Results
We were impressed by how significantly Chuy's blew past analysts' gross margin expectations this quarter. We were also glad its EPS outperformed Wall Street's estimates. On the other hand, its full-year earnings forecast missed analysts' expectations, and this seems to be dragging down shares. As such, the stock is down 5.9% after reporting, trading at $31.25 per share.
So should you invest in Chuy's right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
