Restaurant Stocks to Watch for Earnings on Aug 2: CAKE, YUM, WING
During the second quarter of 2023, restaurant companies’ top line is expected to have witnessed positive effects from several factors. These include the substantial rise in menu prices, growth in average check amounts and successful expansion initiatives. Collaborations with delivery services and digital platforms are advantageous for industry operators. The consistent increase in sales reinforces the positive outlook for the restaurant sector.
The restaurant industry is likely to have experienced notable gains due to the surge in off-premise sales. These sales predominantly encompass delivery, takeout, drive-thru, catering, meal kits, and off-site options like kiosks and food trucks. Partnerships with delivery channels like DoorDash, Grubhub, Postmates and Uber Eats and the rollout of self-service kiosks and loyalty programs continue to drive growth.
However, restaurant operators are facing challenges related to the elevated cost of operations. High wages and food cost inflation are a concern for industry players. The aforementioned factors, rising costs of pre-opening, marketing efforts and sales-boosting initiatives are exerting pressure on the company's margins.
Sneak Peek Into Upcoming Earnings Releases
Let’s focus on a few restaurant companies scheduled to release second-quarter 2023 earnings on Aug 2.
According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Cheesecake Factory Incorporated CAKE is scheduled to report second-quarter fiscal 2023 results after the closing bell.
Cheesecake Factory’s fiscal second-quarter performance is likely to have benefited from solid off-premise sales, robust same-store sales growth and unit-expansion efforts. The rise in average check and menu pricing has been contributing to CAKE’s top line. Management anticipates revenues in the range of $870-$890 million. We expect Cheesecake Factory and North Italia same-store sales to increase 3.4% and 7.5% year over year, respectively.
Off-premise sales contributed approximately 23% of the company’s restaurant sales during first-quarter fiscal 2023 and the uptrend is likely to have continued in the second quarter. It continues to perform well in the delivery channel. (Read more: Cheesecake Factory to Post Q2 Earnings: What's in Store?)
CAKE currently has a Zacks Rank #3 and an Earnings ESP of -1.14%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Cheesecake Factory Incorporated Price and EPS Surprise
The Cheesecake Factory Incorporated price-eps-surprise | The Cheesecake Factory Incorporated Quote
Yum! Brands, Inc. YUM is scheduled to release second-quarter 2023 results before the opening bell.
Yum! Brands’ second-quarter top line is expected to increase year over year, courtesy of strong Taco Bell performance, development efforts and strong value propositions (through menu innovation offerings). This and the continued return of dine-in traffic, digital initiatives and strategic third-party partnerships are likely to have driven comps improvement in the to-be-reported quarter.
For the said quarter, our model predicts Pizza Hut, Taco Bell and Habit Burger revenues to increase 2.7%, 10.2% and 25% year over year to $241.3 million, $645.5 million and $172.6 million, respectively. However, our model estimates KFC revenues to decline 0.3% year over year to $674.9 million. (Read more: YUM! Brands' to Report Q2 Earnings: What's in Store?)
YUM currently has a Zacks Rank #2 and an Earnings ESP of +5.31%.
Yum! Brands, Inc. Price and EPS Surprise
Yum! Brands, Inc. price-eps-surprise | Yum! Brands, Inc. Quote
Wingstop Inc. WING is scheduled to release second-quarter 2023 results before the opening bell.
Wingstop’s second-quarter top line is expected to increase year over year, backed by menu innovation, delivery channel digital transformation and data-driven marketing initiatives. Momentum in digital orders (through AI voice ordering technology) coupled with the expansion of delivery channels (via Uber Eats and DoorDash collaboration) and new restaurant openings are likely to have driven comps improvement in the to-be-reported quarter.
Wingstop Inc. Price and EPS Surprise
Wingstop Inc. price-eps-surprise | Wingstop Inc. Quote
Solid contributions from Royalty revenue, franchise fees and other, Advertising fees and Company-owned restaurant sales are likely to have aided the company’s second quarter top-line. The Zacks Consensus Estimate for second-quarter Royalty revenue, franchise fees and other is pegged at $45.5 million compared with $36 million reported in the prior-year quarter. The consensus mark for revenues from Advertising fees and Company-owned restaurant sales is pegged at $36.3 million and $23.1 million, indicating growth of 25% and 23%, respectively, on a year-over-year basis.
WING currently has a Zacks Rank #3 and an Earnings ESP of +2.44%.
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Yum! Brands, Inc. (YUM) : Free Stock Analysis Report
The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report
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