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The Zacks Analyst Blog Highlights: Jack in the Box, Starbucks, McDonald's and Yum Brands

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For Immediate Release

Chicago, IL – March 12, 2021 – 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: Jack in the Box Inc. JACK, Starbucks Corporation SBUX, McDonald’s Corporation MCD and Yum Brands, Inc. YUM.

Here are highlights from Thursday’s Analyst Blog:

4 Restaurant Stocks to Watch as Hiring Picks Up in February

The restaurant industry has been one of the biggest casualties of the pandemic and is still struggling to get back on its feet. With outdoor dining having come to a standstill, revenues took a big hit for most of 2020. However, in its first sign to bounce back, hiring at restaurants and drinking places finally started to pick up in February.

This definitely is a sign that people are finally showing courage and visiting restaurants, which will eventually help sales. Also, the second round of stimulus checks has started reaching millions of Americans, which is expected to strengthen their purchasing power, thus helping them spend more at restaurants.

Restaurants Hiring More in February

The Department of Labor said on Mar 5 that Restaurants and bars hired 286,000 employees in February. The numbers are one of the highest in recent times given that most restaurants have been cutting jobs as sales continue to decline following the outbreak.

The job gains in February could be the first sign of recovery, indicating that more people are now dining out. Also, according to a National Restaurant News report, citing a study by Bloomberg Intelligence, the $1,400 stimulus checks, if passed, could further lift restaurant sales for up to seven weeks.

The study says that last time when $600 checks were given to millions of Americans as part of the first round of coronavirus stimulus package, restaurant sales increased 3% for casual-dining and 5% for quick-service for three weeks.

Restaurant Industry Bouncing Back

According to a Restaurant Business Online article, citing a report by the National Restaurant Association, U.S. restaurants are on track for a steady recovery after declining 19.2% in 2020, which was also the most challenging year for the industry. The restaurant industry had taken a bad hit following the COVID-19 outbreak but things may finally be changing.

Besides the new round of stimulus checks, the vaccination drive too is in full swing. Already more than 16% of Americans have received at least the first dose of the coronavirus vaccine. Also, President Joe Biden recently announced that there were enough vaccines for every adult American by the end of May.

This is likely to instill some courage in the minds of people who are likely to start visiting restaurants and bars, thus giving a boost to sales. However, even then people are likely to prefer restaurants that are drive-thru or have pickup facilities.

According to the Bloomberg Intelligence study, quick-service restaurants are likely to be benefited more, with drive-thru, delivery and takeout expect to see another 5% jump in sales during this time of the pandemic.

Stocks to Watch

Higher hiring is an indication that the restaurant industry is showing signs of recovery. Moreover, the new round of stimulus checks coupled with the vaccination drive is going to strengthen purchasing power in the days to come. In this scenario, restaurant stocks should appear appealing to investors.

Jack In The Box operates and franchises through Jack In The Box quick-service restaurants, and is one of the nation’s largest hamburger chains. Based on the number of restaurants, the company’s top 10 markets comprise nearly 70% of the total system.

The company’s expected earnings growth rate for the current year is 37.2%. The Zacks Consensus Estimate for current-year earnings has improved 13.9% over the past 30 days. Jack In The Box carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Starbucks is the leading roaster and retailer of specialty coffee in the world. In addition to fresh, rich-brewed coffees, Starbucks’ offerings include many complimentary food items and a selection of premium teas and other beverages, sold mainly through the company’s retail stores. 

The company’s expected earnings growth rate for next year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the past 60 days. Starbucks has a Zacks Rank #3 (Hold).

McDonald’s is a leading fast-food chain that currently operates roughly 38,000 restaurants in more than 100 countries. The company mainly operates and franchises quick-service restaurants under the McDonald’s brand. 

The company’s expected earnings growth rate for next year is 38.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the past 60 days. McDonald’s carries a Zacks Rank #3.

Yum Brands is the global leader in multi-branding and offers consumers more choice and convenience at one outlet. The company presently reports through four segments – KFC (44.8% of total revenues in first-quarter 2020), Pizza Hut (18.6%), Taco Bell (35.9%) and Habit Burger Grill (0.7%). 

The company’s expected earnings growth rate for next year is 7.5%. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the past 60 days. Yum Brands carries a Zacks Rank #3.

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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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