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Restaurants Continue to Serve Sales Growth: 5 Stocks to Buy
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The U.S. restaurant industry has largely been responsible for helping the retail sector survive inflationary pressures. U.S. restaurants saw sales growing at a rapid pace in 2023 in a major turnaround and the trend has continued into 2024.
Restaurant sales totaled $94.3 billion in April, jumping 5.5% on a year-over-year basis. Overall restaurant sales from February through April totaled $36.7 billion.
While the retail sector had a rough ride in 2023 and is still struggling to stage a comeback this year owing to inflation, food and drinking places are witnessing steady growth. This is courtesy of an increasing number of Americans still spending lavishly on eating out.
However, high prices are posing a threat to sales, prompting restaurant operators to combat the issue. They are focusing on digital innovation, striving to boost sales, and implementing cost-cutting measures, which are aiding the industry’s recovery.
Due to the growing importance of the Internet, digital innovation has become crucial. Revenues have risen as major restaurant chains frequently use delivery services and online platforms to enhance sales.
Inflation rose in the first quarter but that didn’t hamper sales at restaurants. Signs of cooling inflation in April helped sales grow further in the month. The consumer price index rose 0.3% sequentially in April, which was below analysts’ expectations of a rise of 0.4%.
Year over year, the Consumer Price Index (CPI) increased by 3.4%, matching estimates. Core CPI, which excludes volatile food and energy prices, rose by 3.6% in April compared to the previous year, and by 0.3% sequentially, both in line with expectations.
Market participants are now expecting at least one rate cut this year, which they believe will likely be in November. Lower interest rates bode well for the restaurant industry and the broader economy.
Our Choices
We have narrowed our search to four restaurant stocks, such as Texas Roadhouse, Inc. (TXRH - Free Report) , Brinker International, Inc. (EAT - Free Report) ,Wingstop Inc. (WING - Free Report) andThe ONE Group Hospitality, Inc. (STKS - Free Report) , that have strong potential for 2024.
Texas Roadhouse, Inc. is a full-service, casual dining restaurant chain that offers assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. TXRH operates restaurants under the Texas Roadhouse and Aspen Creek names. Texas Roadhouse also offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, an assortment of hamburgers, salads and sandwiches.
Texas Roadhouse’s expected earnings growth rate for the current year is 32.6%. The Zacks Consensus Estimate for current-year earnings has improved 5.4% over the past 60 days. TXRH presently carries a Zacks Rank #1.
Brinker International, Inc. primarily owns, operates, develops and franchises various restaurants under the Chili’s Grill & Bar and Maggiano’s Little Italy brands. EAT took over Chili’s, Inc., a Texas corporation, in September 1983 and completed the acquisition of Maggiano’s in August 1995. Chili’s is a preeminent leader in the bar & grill category of casual dining. The brand has been functioning for over the last 40 years.
Brinker International’s expected earnings growth rate for the current year is 41.3%. The Zacks Consensus Estimate for current-year earnings has improved 8.1% over the past 60 days. EAT currently sports a Zacks Rank #1.
Wingstop Inc. franchises and operates restaurants. WING operates through the Franchise segment and the Company segment. Wingstop offers cooked-to-order, hand-sauced and tossed chicken wings.
Wingstop’sexpected earnings growth rate for the current year is 36.7%. The Zacks Consensus Estimate for current-year earnings has improved 13.8% over the past 60 days. WING currently sports a Zacks Rank #1.
The ONE Group Hospitality, Inc. develops, manages and operates a portfolio of high-energy restaurants, lounges and bars. STKS also provides food and beverage hospitality solutions. The ONE Group Hospitality’s primary restaurant brand is STK, which is a steakhouse concept with locations in metropolitan cities throughout the United States and in London.
The ONE Group Hospitality’s expected earnings growth rate for the current year is 83.3%. The Zacks Consensus Estimate for current-year earnings has improved 120% over the past 60 days. STKS currently carries a Zacks Rank #2.
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Restaurants Continue to Serve Sales Growth: 5 Stocks to Buy
The U.S. restaurant industry has largely been responsible for helping the retail sector survive inflationary pressures. U.S. restaurants saw sales growing at a rapid pace in 2023 in a major turnaround and the trend has continued into 2024.
Restaurant sales totaled $94.3 billion in April, jumping 5.5% on a year-over-year basis. Overall restaurant sales from February through April totaled $36.7 billion.
While the retail sector had a rough ride in 2023 and is still struggling to stage a comeback this year owing to inflation, food and drinking places are witnessing steady growth. This is courtesy of an increasing number of Americans still spending lavishly on eating out.
However, high prices are posing a threat to sales, prompting restaurant operators to combat the issue. They are focusing on digital innovation, striving to boost sales, and implementing cost-cutting measures, which are aiding the industry’s recovery.
Due to the growing importance of the Internet, digital innovation has become crucial. Revenues have risen as major restaurant chains frequently use delivery services and online platforms to enhance sales.
Inflation rose in the first quarter but that didn’t hamper sales at restaurants. Signs of cooling inflation in April helped sales grow further in the month. The consumer price index rose 0.3% sequentially in April, which was below analysts’ expectations of a rise of 0.4%.
Year over year, the Consumer Price Index (CPI) increased by 3.4%, matching estimates. Core CPI, which excludes volatile food and energy prices, rose by 3.6% in April compared to the previous year, and by 0.3% sequentially, both in line with expectations.
Market participants are now expecting at least one rate cut this year, which they believe will likely be in November. Lower interest rates bode well for the restaurant industry and the broader economy.
Our Choices
We have narrowed our search to four restaurant stocks, such as Texas Roadhouse, Inc. (TXRH - Free Report) , Brinker International, Inc. (EAT - Free Report) ,Wingstop Inc. (WING - Free Report) andThe ONE Group Hospitality, Inc. (STKS - Free Report) , that have strong potential for 2024.
These stocks have seen positive earnings estimate revisions in the last 60 days. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Texas Roadhouse, Inc. is a full-service, casual dining restaurant chain that offers assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. TXRH operates restaurants under the Texas Roadhouse and Aspen Creek names. Texas Roadhouse also offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, an assortment of hamburgers, salads and sandwiches.
Texas Roadhouse’s expected earnings growth rate for the current year is 32.6%. The Zacks Consensus Estimate for current-year earnings has improved 5.4% over the past 60 days. TXRH presently carries a Zacks Rank #1.
Brinker International, Inc. primarily owns, operates, develops and franchises various restaurants under the Chili’s Grill & Bar and Maggiano’s Little Italy brands. EAT took over Chili’s, Inc., a Texas corporation, in September 1983 and completed the acquisition of Maggiano’s in August 1995. Chili’s is a preeminent leader in the bar & grill category of casual dining. The brand has been functioning for over the last 40 years.
Brinker International’s expected earnings growth rate for the current year is 41.3%. The Zacks Consensus Estimate for current-year earnings has improved 8.1% over the past 60 days. EAT currently sports a Zacks Rank #1.
Wingstop Inc. franchises and operates restaurants. WING operates through the Franchise segment and the Company segment. Wingstop offers cooked-to-order, hand-sauced and tossed chicken wings.
Wingstop’sexpected earnings growth rate for the current year is 36.7%. The Zacks Consensus Estimate for current-year earnings has improved 13.8% over the past 60 days. WING currently sports a Zacks Rank #1.
The ONE Group Hospitality, Inc. develops, manages and operates a portfolio of high-energy restaurants, lounges and bars. STKS also provides food and beverage hospitality solutions. The ONE Group Hospitality’s primary restaurant brand is STK, which is a steakhouse concept with locations in metropolitan cities throughout the United States and in London.
The ONE Group Hospitality’s expected earnings growth rate for the current year is 83.3%. The Zacks Consensus Estimate for current-year earnings has improved 120% over the past 60 days. STKS currently carries a Zacks Rank #2.