Restaurant Stocks' Oct 30 Earnings Roster: SBUX, YUM & More

The Restaurant industry third-quarter 2019 performance is likely to reflect the impact of lower foot traffic and high costs. According to tdn2k, restaurant industry’s same-store sales are likely to see a decline of 0.4%. The decrease can primarily be attributed to same-store traffic decline of 3.5%.

Further, sales-building efforts such as promotional activities and prudent pricing plans have been eroding margins. Apart from this, intense competition, high wage and food cost inflation are likely to get reflected on the industry participants’ third-quarter results. Moreover, most restaurateurs have been facing rising employee vacancies and are perpetually understaffed, a trend that is likely to have continued in the third quarter and consequently might impact overall performance.

The restaurant operators are continuously trying to strategize and maintain competitive edge by catering to changing preferences and trends. This has been evident from collaborations with delivery channels and digital platforms to drive incremental sales. These efforts are anticipated to get reflected in the third-quarter results.

Per the latest Earnings Preview, total earnings of the Zacks Retail/Wholesale sector are expected to be down 0.7%. However, revenues for the sector are anticipated to improve by 8.7%.

Let’s take a sneak peek at how the following restaurant operators are poised prior to their earnings release on Oct 30

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 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 2019 results on Oct 30, after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 8.3%.

Robust performance of Americas and China-Asia-Pacific (CAP) segments are likely to get reflected in the company’s fourth-quarter results. Further, the company’s fourth-quarter performance is likely to reflect new store additions, expansion in China and positive global comparable store sales.

The Zacks Consensus Estimate for revenues for Americas and CAP segments is anticipated to witness year-over-year growth of nearly 7% and 11% to $1,322 million and $4,563 million, respectively. Rapid unit growth, rising brand awareness and increased usage of the digital/mobile/loyalty platforms is likely to have benefited China and the Asia-Pacific region.

However, Channel Development, and Europe, Middle East and Africa (EMEA) segments’ dismal performance are likely to have weighed on the company’s fourth-quarter performance.  Revenues from Channel Development and EMEA is likely to decline nearly 14% and 12% to $465 million to $235 million, respectively. (Read More: Solid Americas Segment to Aid Starbucks' Q4 Earnings)

The company has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.

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-eps-surprise | Starbucks Corporation Quote

YUM! Brands, Inc. YUM is scheduled to report third-quarter 2019 results, before the opening bell. In the last reported quarter, the company’s earnings and revenues topped the respective Zacks Consensus Estimate by 5.7% and 2.7%, respectively.

YUM! Brands is anticipated to have suffered from a sales slump, which can be attributed to continued refranchising initiatives. The de-risking strategy of the company by reducing the ownership of restaurants and expanding franchise is anticipated to have affected revenues in the to-be-reported quarter.

Despite high cost of operations, franchising is likely to have driven YUM! Brands’ third-quarter 2019 earnings. We note that refranchising a large portion of the system reduces the company’s capital requirements, and facilitates earnings per share growth and ROE expansion. (Read more: YUM! Brands to Report Q3 Earnings: What's in Store?)

The company has a Zacks Rank #3 and an Earnings ESP of -3.56%.

Yum! Brands, Inc. Price and EPS Surprise

 

Yum! Brands, Inc. Price and EPS Surprise

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

Wingstop Inc. WING is scheduled to report third-quarter 2019 results, before the opening bell. In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate.

Wingstop’s third-quarter top line is likely to have benefited from various sales boosting strategies including robust delivery program, efficient marketing and promotions, and increased focus on franchising. Moreover, higher royalty revenues and franchise fees, and increase in advertising fees and related income are likely to get reflected in the company’s third-quarter results.

Moreover, its partnership with DoorDash is likely to have driven digital sales in the third quarter. However, increase in costs and higher net interest expenses are likely to have weighed on the bottom line in the third quarter. (Read more: Factors Setting the Tone for Wingstop's Q3 Earnings)

The company has a Zacks Rank #2 and an Earnings ESP of +5.62%.

Wingstop Inc. Price and EPS Surprise

 

Wingstop Inc. Price and EPS Surprise

Wingstop Inc. price-eps-surprise | Wingstop Inc. Quote

Brinker International, Inc. EAT is scheduled to report first-quarter fiscal 2020 results, before the opening bell. In the last reported quarter, the company’s earnings surpassed the consensus estimate by 0.7%.

The company’s first-quarter top line is likely to have benefited from traffic-building strategies and efforts to capture increased market share. Moreover, Brinker’s remodeling efforts have gained momentum leading to improvement in sales. Notably, the company continues to invest in its reimage program.

However, costs related to various sales-boosting initiatives, including advertising expenses, and commodity inflation and labor costs are likely to get reflected in the company’s first-quarter results.

The company has a Zacks Rank #2 and an Earnings ESP of 0.00%.

Brinker International, Inc. Price and EPS Surprise

 

Brinker International, Inc. Price and EPS Surprise

Brinker International, Inc. price-eps-surprise | Brinker International, Inc. Quote

Dine Brands Global, Inc. DIN is slated to report third-quarter 2019 results, before the opening bell. In the previous quarter, the company reported an earnings miss of 7.6%. Notably, the company’s earnings beat the consensus estimate in two of the trailing four quarters, the average being 0.2%. The company has an Earnings ESP of -1.56% and a Zacks Rank #4.

DINE BRANDS GLOBAL, INC. Price and EPS Surprise

 

DINE BRANDS GLOBAL, INC. Price and EPS Surprise

DINE BRANDS GLOBAL, INC. price-eps-surprise | DINE BRANDS GLOBAL, INC. Quote

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