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Restaurant Stocks' Earnings Due on Feb 21: PZZA, CBRL, TXRH

Zacks Equity Research

We are in the last leg of the Q4 earnings season, with 411 of the S&P 500 members having already reported their quarterly numbers (as of Feb 17), per the latest Earnings Preview.

Turning our focus to the widely popular restaurant industry, we note that the performance of the players here has been mixed so far this earnings season.

Among the restaurant stocks that have reported, McDonald’s Corporation MCD and Dunkin' Brands Group, Inc. DNKN posted robust results beating both top- and bottom-line expectations. Meanwhile, Chipotle Mexican Grill, Inc. CMG and Starbucks Corporation SBUX topped and met earnings estimates, respectively, but missed revenue estimates. On the other hand, Brinker International, Inc. EAT lagged on both fronts.

Three restaurant companies are set to report their quarterly results on Feb 21. Will these companies manage to put up a decent performance? Let’s take a look at what might be in store for these companies:

Papa John’s International, Inc. PZZA posted a 14.00% positive earnings surprise in the previous quarter. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 11.31%.

Papa John's International, Inc. Price and EPS Surprise

 

Papa John's International, Inc. Price and EPS Surprise | Papa John's International, Inc. Quote

Notably, our proven model shows that an earnings beat is likely for Papa John’s this time around. This is because the company has the right combination of the two key ingredients – a Zacks Rank #3 (Hold) or better and a positive Earnings ESP – to increase its odds of an earnings surprise.

For fourth-quarter 2016, the company has an Earnings ESP of +4.55% and a Zacks Rank #2 (Buy). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for the quarter’s bottom line is pegged at 66 cents. The company’s investments in technology-driven initiatives like digital ordering and applications development are expected to attract new customers and drive growth as well as efficiency in the to-be-reported quarter. However, rising labor costs and expenses incurred to execute the initiatives might dent the quarter’s profits (read more: Papa John's: A Beat in the Cards in Q4 Earnings?).

Cracker Barrel Old Country Store, Inc. CBRL recorded a positive earnings surprise of 9.24% in the last reported quarter. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 2.96%.

Cracker Barrel Old Country Store, Inc. Price and EPS Surprise

 

Cracker Barrel Old Country Store, Inc. Price and EPS Surprise | Cracker Barrel Old Country Store, Inc. Quote

For the second-quarter fiscal 2017, the company has an Earnings ESP of 0.00%, which makes surprise prediction difficult even though the company has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for the quarter’s earnings is pegged at $2.14 per share. We expect the company’s focus on delivering a differentiated brand experience, its excellent operations execution and its broadened marketing efforts to boost comps in the to-be-reported quarter. Nevertheless, management believes that despite improvement over fiscal first quarter performance, the fiscal second quarter retail sales are likely to witness a decline year over year.

Texas Roadhouse, Inc. TXRH posted a 2.70% negative earnings surprise in the previous quarter. Conversely, the trailing four-quarter average earnings surprise is a positive 3.16%.

Texas Roadhouse, Inc. Price and EPS Surprise

 

Texas Roadhouse, Inc. Price and EPS Surprise | Texas Roadhouse, Inc. Quote

We note that Texas Roadhouse is unlikely to post a beat in the fourth-quarter 2016 due to the combination of its Zacks Rank #4 (Sell) and Earnings ESP of -5.26%. The Zacks Consensus Estimate for the quarter’s bottom line is pegged at 38 cents.

Notably, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stay tuned! Check back on our full write-up on earnings releases of these stocks.

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Cracker Barrel Old Country Store, Inc. (CBRL): Free Stock Analysis Report
 
Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report
 
Starbucks Corporation (SBUX): Free Stock Analysis Report
 
McDonald's Corporation (MCD): Free Stock Analysis Report
 
Texas Roadhouse, Inc. (TXRH): Free Stock Analysis Report
 
Papa John's International, Inc. (PZZA): Free Stock Analysis Report
 
Brinker International, Inc. (EAT): Free Stock Analysis Report
 
Dunkin' Brands Group, Inc. (DNKN): Free Stock Analysis Report
 
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