In a recent report, Wunderlich Securities broke down the outlook for restaurant stocks
after preliminary data of very strong January same store sales (SSS) numbers.
According to Black Box Intelligence, the SSS index grew 6.1 percent in January, its strongest growth rate in six years. SSS numbers grew 3.1 percent year-over-year in December and only 1.5 percent in November.
Recent commentary from management of Buffalo Wild Wings Inc BWLD 0.16% and Chipotle Mexican Grill Inc CMG 0.69% supports evidence of strong 2015 SSS numbers.
In the report, Wunderlich analysts gave their forecasts for five restaurant names that have yet to report earnings.
Panera Bread Co PNRA 1.47%
Wunderlich predicts earnings per share (EPS) of $1.83 on Q4 revenue of $672.1 million. The report mentions the strength of the company’s new products and potential slowdown of café expansion as two things to watch for when the company reports.
Cheesecake Factory Inc CAKE 2.11%
Wunderlich is projecting Q4 EPS of $0.60, in line with consensus. Analysts believe that the company’s Q3 miss and reduced guidance was significantly impacted by extremely high dairy prices, which have since improved.
Red Robin Gourmet Burgers Inc RRGB 0.26%
Wunderlich is projecting Q4 EPS of $0.65 on revenue of $280.2 million, both slightly lower than consensus. However, analysts praise the company’s strong growth and the stock’s attractive valuation and call Red Robin one of their “2015 top picks.”
Jack in the Box Inc JACK 1.13%
Wunderlich is predicting EPS of $0.85 for Jack in the Box, slightly below consensus estimates of $0.87. Analysts mention strong SSS numbers, strong performance from Qdoba and solid free cash flow as three major drivers for the company moving forward.
BJ’s Restaurants Inc BJRI 0.62%
BJ’s recently pre-released disappointing Q4 revenue of $213.9 million. However, 1.2 percent growth in SSS was better than expected. Wunderlich forecasts EPS of $0.21 for the quarter.
Not Surprised
Wunderlich analysts are not surprised at the strong January SSS numbers. They have a positive outlook for the restaurant space in 2015, especially during the first couple of months of the year. The improving economy, consumer confidence, low gas prices and good weather makes for easy year-over-year comparisons to last year’s weak numbers.
Wunderlich has a Buy rating on Buffalo Wild Wings, Chipotle, Jack in the Box, Red Robin and Sonic Corp SONC 1.16%. They have a Hold rating on Panera Bread, Cheesecake Factory and BJ’s.
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