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Restaurant Stocks' Oct 29 Earnings Roster: SBUX, YUM & More

Zacks Equity Research
·6 min read

The restaurant industry might have benefited from robust off-premise sales, digital initiatives and sales building initiatives. Although the industry sales are still below the pre-pandemic level, it is showing signs of improvement.

Restaurant operators’ focus on digital innovation, sales building initiatives and cost savings efforts have been acting as catalysts. With the growing influence of Internet, digital innovation has become the need of the hour.

The restuarant industry is gradually witnessing improving sales. The industry participants are also hiring, which indicates that the industry is finally gaining confidence. Food services and drinking places added 200,300 jobs in September taking the total to 10 million jobs, which was lower by 17.6% compared with the prior year. Per the National Restaurant Association, September's sales were up 2.1% from August's seasonally adjusted volume of $54.47 billion. However, the trade group added that September eating and drinking place sales were around $10 billion, or 15%, below their pre-coronavirus levels in January and February.

However, the restaurant industry has been facing declining traffic for quite some time now. The pandemic has aggravated the scenario further. Rapid increase in menu price and the coronavirus pandemic are the primary reasons behind traffic erosion.

Let’s take a look at some restaurant stocks scheduled to announce results on Oct 29.

According to the proven Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Starbucks Corporation SBUX is scheduled to report fourth-quarter fiscal 2020 results after the closing bell.

The company’s fiscal fourth-quarter results are likely to reflect the impact of the coronavirus pandemic. Global retail and comparable sales, and decline in store traffic might have impacted the to-be-reported quarter’s performance. The company’s three segments — Americas, International and Channel Development — are likely to have witnessed decline in sales.
It anticipates international’s comparable store sales to decline in the range of 10% to 15% in the fiscal fourth quarter, which includes a 3% favorable VAT impact. Starbucks expects comparable store sales in China to be flat to -5%. The company projects global comparable sales to decline 12% and 17% in the fourth quarter and fiscal 2020, respectively.

Margin decline has been a major concern for the company and the downtrend is likely to have persisted in the fiscal fourth-quarter. This was because of sales deleverage and rise in costs on account of the coronavirus pandemic, primarily catastrophe wages; heightened pay programs and additional benefits in support of retail store partners; inventory write-offs; and store safety items. (Read more: What's in the Offing for Starbucks in Q4 Earnings?)

The company has a Zacks Rank #3 and an Earnings ESP of +0.43%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Starbucks Corporation Price and EPS Surprise

Starbucks Corporation Price and EPS Surprise
Starbucks Corporation Price and EPS Surprise

Starbucks Corporation price-eps-surprise | Starbucks Corporation Quote

YUM! Brands, Inc. YUM is scheduled to report third-quarter 2020 results before the opening bell.

Yum! Brands’ third-quarter performance is likely to have benefited from strong digitization, delivery services and global expansion. Robust performance of Taco Bells and Pizza Hut is likely to have aided the company’s top line. The Zacks Consensus Estimate for revenues at Pizza Hut and Taco Bell segments is pegged at $248 million and $518 million, suggesting year-over-year growth of 2.9% and 5.9%, respectively. However, the consensus estimate for revenues at KFC stands at $569 million, indicating a decline of 7% year over year.

Yum! Brands’ partnership with online food delivery platform Grubhub might have boosted online sales and delivery from its restaurants.

The company has a Zacks Rank #2 and an Earnings ESP of +0.42%.

Yum Brands, Inc. Price and EPS Surprise

Yum Brands, Inc. Price and EPS Surprise
Yum Brands, Inc. Price and EPS Surprise

Yum Brands, Inc. price-eps-surprise | Yum Brands, Inc. Quote

Dunkin' Brands Group, Inc. DNKN is scheduled to report third-quarter 2020 results before the opening bell.

For the quarter to be reported, the Zacks Consensus Estimate for the bottom line is pegged at 81 cents per share, compared with earnings of 90 cents reported in the prior-year quarter. Revenues are anticipated at $339.5 million, suggesting a decline of 4.5% from $355.9 million reported in the year-ago quarter.

The company’s business, financial condition and operational results in the quarter are likely to reflect negative impact of the coronavirus pandemic. However, various sales-building initiatives like product launches, focus on beverage portfolio, aggressive expansion and enhanced digital offerings might have contributed to the top line in the quarter to be reported.

The company has a Zacks Rank #3 and an Earnings ESP of -0.29%.

Dunkin Brands Group, Inc. Price and EPS Surprise

Dunkin Brands Group, Inc. Price and EPS Surprise
Dunkin Brands Group, Inc. Price and EPS Surprise

Dunkin Brands Group, Inc. price-eps-surprise | Dunkin Brands Group, Inc. Quote

Shake Shack Inc. SHAK is scheduled to report third-quarter 2020 results after the closing bell. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 12.5%.

For the quarter to be reported, the Zacks Consensus Estimate for the bottom line is pegged at a loss of 24 cents per share. Notably, the company had reported an earnings of 26 cents in the prior-year quarter. The consensus mark for revenues stands at $126 million, suggesting a decline of 20.1% from $157.8 million reported in the year-ago quarter.

The company has a Zacks Rank #4 (Sell) and an Earnings ESP of -2.46%.

Shake Shack, Inc. Price and EPS Surprise

Shake Shack, Inc. Price and EPS Surprise
Shake Shack, Inc. Price and EPS Surprise

Shake Shack, Inc. price-eps-surprise | Shake Shack, Inc. Quote

The Cheesecake Factory Incorporated CAKE is scheduled to report third-quarter 2020 results after the closing bell. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 18.7%.

For the to-be-reported quarter, the Zacks Consensus Estimate for the bottom line is pegged at a loss of 51 cents per share. It is worth mentioning that the company had reported an earnings of 59 cents in the prior-year quarter. Revenues are anticipated at $492.8 million, suggesting a decline of 16% from $586.5 million in the year-ago quarter.

Dismal traffic owing to the coronavirus pandemic is likely to have impacted the company’s results in the quarter. Moreover, high costs remain a concern.

The company has a Zacks Rank #3 and an Earnings ESP of 0.00%.

The Cheesecake Factory Incorporated Price and EPS Surprise

The Cheesecake Factory Incorporated Price and EPS Surprise
The Cheesecake Factory Incorporated Price and EPS Surprise

The Cheesecake Factory Incorporated price-eps-surprise | The Cheesecake Factory Incorporated Quote

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The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report
 
Starbucks Corporation (SBUX) : Free Stock Analysis Report
 
Yum Brands, Inc. (YUM) : Free Stock Analysis Report
 
Dunkin Brands Group, Inc. (DNKN) : Free Stock Analysis Report
 
Shake Shack, Inc. (SHAK) : Free Stock Analysis Report
 
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Zacks Investment Research