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The Zacks Analyst Blog Highlights: Carrols Restaurant, Wendy's and Noodles & Company

Zacks Equity Research

For Immediate Release

Chicago, IL – May 8, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Carrols Restaurant Group, Inc. TAST, The Wendy's Company WEN and Noodles & Company NDLS.

Here are highlights from Tuesday’s Analyst Blog:

Restaurant Q1 Earnings: Key Predictions for TAST, WEN & NDLS

The first-quarter earnings season has witnessed releases from more than half of the restaurant companies. Notably, the results so far gained from increased consumer spending, restaurateurs’ focus on digital innovation and improvement in average check. However, the industry continues to bear the brunt of declining traffic and intense competition.

Q1 Report Card

The restaurant industry has impressed investors with same-store sales growth for the fourth straight quarter this reporting cycle. Per TDn2K’s The Restaurant Industry Snapshot, the overall first quarter was satisfactory, with 1% comps growth. Also, guest check-in grew 0.8% year over year, offsetting the negative impact of traffic erosion. Most of the restaurant operators have been continuously partnering with delivery channels and digital platforms to drive incremental sales.

However, same-store traffic declined 2% in the quarter. Persistent erosion in traffic despite comps growth indicates that it is only guest checks and not guest count that contributed to restaurant sales. This also means that consumers are not visiting restaurants frequently and getting increasingly reliant on delivery services.

Additionally, restaurant giants are negatively impacted by high cost of operations. Further, sales-building efforts such as promotional activities and a convincing pricing strategy are weighing on margins.

Stocks Scheduled to Report Q1 Earnings This Week

Carrols Restaurant Group, Inc. is scheduled to report financial numbers on May 8. The company delivered in-line earnings in the preceding quarter. Notably, the bottom line surpassed the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 17.8%.

For the first quarter, the Zacks Consensus Estimate is pegged at a loss of 16 cents compared with a loss of 8 cents incurred in the prior-year quarter. The consensus mark for quarterly revenues is pinned at $292.3 million, indicating a 7.6% rise from the year-ago quarter’s reported number.

According to the Zacks model, Carrols Restaurant is unlikely to beat earnings estimates this quarter. Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP the chance of beating earnings estimates is high. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Carrols Restaurant’s Earnings ESP of -34.04% and a Zacks Rank #3 makes surprise prediction inconclusive. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Wendy's Company is slated to report financial figures on May 8. In the last reported quarter, the company’s earnings surpassed the consensus mark by 6.7%. The bottom line also outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 4.4%.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 12 cents, suggesting growth of 9.1% from the prior-year quarter number. For revenues, the same is pegged at $399.2 million, implying 4.9% improvement from the year-ago period.

Our proven model does not show that Wendy's will beat earnings estimates in this reporting cycle. The company has an Earnings ESP of -1.71% and a Zacks Rank #3.

Noodles & Company is scheduled to report financial results on May 9. The company’s earnings missed the consensus estimate in three of the trailing four quarters, the average miss being 54.2%.

For the first quarter, the Zacks Consensus Estimate is pegged at a loss of 5 cents compared with a loss of 4 cents incurred in the prior-year quarter. For revenues, the same is pegged at $108.9 million, indicating a 1.5% decline from the year-ago quarter’s reported figure.

Our proven model does not show that Noodles & Company is likely to beat estimates in the upcoming quarterly results. The company has an Earnings ESP of 0.00% and a Zacks Rank #5.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Noodles & Company (NDLS) : Free Stock Analysis Report
 
Carrols Restaurant Group, Inc. (TAST) : Free Stock Analysis Report
 
The Wendy's Company (WEN) : Free Stock Analysis Report
 
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