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3 Restaurant Stocks Poised to Deliver Q2 Earnings Beat
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Restaurant companies' second-quarter 2024 results are likely to be bolstered by increased menu prices, higher average check sizes and expansion initiatives. Many restaurant companies benefited from partnerships with delivery services and digital platforms.
Restaurant operators have been focused on digital innovation, sales-building strategies and cost-saving measures. Digital innovation has become crucial, with partnerships with delivery services like DoorDash, Grubhub, Postmates and Uber Eats playing a significant role in boosting sales. The introduction of self-service kiosks and loyalty programs bodes well.
The industry players are likely to have benefited from the rise in off-premise sales, including delivery, takeout, drive-thru, catering, meal kits, and off-site options like kiosks and food trucks in the second quarter. Many operators also tested ghost or virtual kitchens, which have received positive customer feedback. The combination of off-premise offerings and connected curbside services has further driven customer satisfaction and industry growth.
The latest Earnings Trend report suggests that the Zacks Retail-Wholesale sector’s second-quarter earnings are expected to increase 7.3% from the year-ago period’s reported figure. The previous quarter recorded a 28.1% increase. The sector’s revenues are projected to increase 4.4%, compared with 5% reported in the previous quarter. However, margins are expected to increase 0.2%. Companies from the restaurant industry, like BJ's Restaurants, Inc. (BJRI - Free Report) , Wingstop Inc. (WING - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) are expected to beat estimates in the ongoing reporting cycle.
However, high costs are likely to have negatively impacted the companies margin to some extent in second-quarter 2024. Intense competition, high wages and food cost inflation are concerning. The industry continues to bear increased expenses, which have been affecting margins. Higher pre-opening costs, marketing expenses and costs related to sales-boosting initiatives have been exerting pressure on the company’s margins.
How to Make the Right Pick?
Given the wide range of companies in this space, the task is by no means easy. While it is impossible to be sure of the outperformers, our proprietary methodology — a positive Earnings ESP along with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — makes it relatively simple. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for identifying stocks with high chances of delivering a surprise in their upcoming earnings announcements. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with the abovementioned combination, chances of a positive earnings surprise are as high as 70%.
Our Choices
Here we discuss in detail the three abovementioned restaurant companies that are likely to beat estimates this time around.
BJ's Restaurants is scheduled to report second-quarter 2024 results on Jul 25. BJRI currently sports a Zacks Rank #1 and has an Earnings ESP of +9.25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
BJ's Restaurants’ second-quarter top line is likely to have been aided by productivity and margin enhancement initiatives and operational excellence across its restaurants. Also, the company’s expansion and, remodeling and digital initiatives are encouraging.
The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at 49 cents per share, suggesting a decline of 2% from 50 cents reported in the prior-year quarter.
Wingstop is slated to report fiscal second-quarter fiscal 2024 results on Jul 31. WING currently has an Earnings ESP of +2.03% and a Zacks Rank #2.
The company’s second-quarter results are likely to benefit from delivery channel expansion, menu innovation and digital marketing initiatives. Also, its supply-chain strategy and robust unit economics are adding to the positives. The Zacks Consensus Estimate for second-quarter fiscal 2024 earnings is pegged at 80 cents per share, suggesting growth of 40.4% from 57 cents reported in the prior-year quarter.
Chipotle is scheduled to report second-quarter 2024 results on Jul 24. CMG currently has an Earnings ESP of +0.72% and a Zacks Rank #3.
Chipotle's second-quarter performance is likely to have benefited from its digital efforts, Chipotlane add-ons and marketing initiatives. These, along with strength in digital sales and new restaurant openings, have been driving the company.
Chipotle Mexican Grill, Inc. Price and EPS Surprise
We expect food and beverage revenues to increase 16.2% year over year to $2,901.2 million. Moreover, delivery service revenues are expected to be $19.3 million, up 11.5% year over year.
The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at 31 cents per share, suggesting growth of 24% from 25 cents reported in the prior-year quarter.
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3 Restaurant Stocks Poised to Deliver Q2 Earnings Beat
Restaurant companies' second-quarter 2024 results are likely to be bolstered by increased menu prices, higher average check sizes and expansion initiatives. Many restaurant companies benefited from partnerships with delivery services and digital platforms.
Restaurant operators have been focused on digital innovation, sales-building strategies and cost-saving measures. Digital innovation has become crucial, with partnerships with delivery services like DoorDash, Grubhub, Postmates and Uber Eats playing a significant role in boosting sales. The introduction of self-service kiosks and loyalty programs bodes well.
The industry players are likely to have benefited from the rise in off-premise sales, including delivery, takeout, drive-thru, catering, meal kits, and off-site options like kiosks and food trucks in the second quarter. Many operators also tested ghost or virtual kitchens, which have received positive customer feedback. The combination of off-premise offerings and connected curbside services has further driven customer satisfaction and industry growth.
The latest Earnings Trend report suggests that the Zacks Retail-Wholesale sector’s second-quarter earnings are expected to increase 7.3% from the year-ago period’s reported figure. The previous quarter recorded a 28.1% increase. The sector’s revenues are projected to increase 4.4%, compared with 5% reported in the previous quarter. However, margins are expected to increase 0.2%. Companies from the restaurant industry, like BJ's Restaurants, Inc. (BJRI - Free Report) , Wingstop Inc. (WING - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) are expected to beat estimates in the ongoing reporting cycle.
However, high costs are likely to have negatively impacted the companies margin to some extent in second-quarter 2024. Intense competition, high wages and food cost inflation are concerning. The industry continues to bear increased expenses, which have been affecting margins. Higher pre-opening costs, marketing expenses and costs related to sales-boosting initiatives have been exerting pressure on the company’s margins.
How to Make the Right Pick?
Given the wide range of companies in this space, the task is by no means easy. While it is impossible to be sure of the outperformers, our proprietary methodology — a positive Earnings ESP along with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — makes it relatively simple. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for identifying stocks with high chances of delivering a surprise in their upcoming earnings announcements. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with the abovementioned combination, chances of a positive earnings surprise are as high as 70%.
Our Choices
Here we discuss in detail the three abovementioned restaurant companies that are likely to beat estimates this time around.
BJ's Restaurants is scheduled to report second-quarter 2024 results on Jul 25. BJRI currently sports a Zacks Rank #1 and has an Earnings ESP of +9.25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
BJ's Restaurants’ second-quarter top line is likely to have been aided by productivity and margin enhancement initiatives and operational excellence across its restaurants. Also, the company’s expansion and, remodeling and digital initiatives are encouraging.
The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at 49 cents per share, suggesting a decline of 2% from 50 cents reported in the prior-year quarter.
BJ's Restaurants, Inc. Price and EPS Surprise
BJ's Restaurants, Inc. price-eps-surprise | BJ's Restaurants, Inc. Quote
Wingstop is slated to report fiscal second-quarter fiscal 2024 results on Jul 31. WING currently has an Earnings ESP of +2.03% and a Zacks Rank #2.
The company’s second-quarter results are likely to benefit from delivery channel expansion, menu innovation and digital marketing initiatives. Also, its supply-chain strategy and robust unit economics are adding to the positives.
The Zacks Consensus Estimate for second-quarter fiscal 2024 earnings is pegged at 80 cents per share, suggesting growth of 40.4% from 57 cents reported in the prior-year quarter.
Wingstop Inc. Price and EPS Surprise
Wingstop Inc. price-eps-surprise | Wingstop Inc. Quote
Chipotle is scheduled to report second-quarter 2024 results on Jul 24. CMG currently has an Earnings ESP of +0.72% and a Zacks Rank #3.
Chipotle's second-quarter performance is likely to have benefited from its digital efforts, Chipotlane add-ons and marketing initiatives. These, along with strength in digital sales and new restaurant openings, have been driving the company.
Chipotle Mexican Grill, Inc. Price and EPS Surprise
Chipotle Mexican Grill, Inc. price-eps-surprise | Chipotle Mexican Grill, Inc. Quote
We expect food and beverage revenues to increase 16.2% year over year to $2,901.2 million. Moreover, delivery service revenues are expected to be $19.3 million, up 11.5% year over year.
The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at 31 cents per share, suggesting growth of 24% from 25 cents reported in the prior-year quarter.