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What to Expect from Fogo de Chao (FOGO) in Q3 Earnings?
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Fogo de Chao, Inc. is set to report its third-quarter 2016 results on Nov 7, after the market closes. This will mark the leading Brazilian steakhouse’s sixth quarterly earnings release since it began trading on NASDAQ in Jun 2015.
Last quarter, the company posted a negative earnings surprise of 12%. In fact, it has missed estimates in two of the trailing four quarters and met in the other two, bringing the average surprise to negative 5.18%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Fogo de Chao specializes in fire-roasting high-quality meats, using the centuries old Southern Brazilian cooking technique of churrasco. It offers several varieties of meat − beef, lamb, chicken, pork and seafood − to suit the palate of diners. The company’s unique South American style of cooking on an open flame has helped it gain enormous popularity.
Fogo de Chao’s third quarter has historically been the lowest seasonal quarter in terms of both total revenue and earnings per share. The to-be-reported quarter is thus likely to be affected by this seasonality as well.
The top line in the third quarter should benefit from initiatives like menu innovation, marketing through various channels, re-imaging of restaurants and unit expansion efforts.
Meanwhile, higher labor costs and costs related to sales initiatives are projected to keep third-quarter profits under pressure. A challenging sales environment in the restaurant industry space is likely to hurt comps in the to-be-reported quarter. Also, foreign currency fluctuations may further hurt top-line growth.
Our proven model does not conclusively show that Fogo de Chao is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks ESP: The company has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 15 cents.
Zacks Rank: Fogo de Chao has a Zacks Rank #3. This when combined with a 0.00% ESP makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few companies in the restaurant industry which, per our model, have the right combination of elements to post an earnings beat this quarter:
The Wendy’s Company (WEN - Free Report) has an Earnings ESP of +10% and a Zacks Rank #2.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +15.39% and a Zacks Rank #3.
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What to Expect from Fogo de Chao (FOGO) in Q3 Earnings?
Fogo de Chao, Inc. is set to report its third-quarter 2016 results on Nov 7, after the market closes. This will mark the leading Brazilian steakhouse’s sixth quarterly earnings release since it began trading on NASDAQ in Jun 2015.
Last quarter, the company posted a negative earnings surprise of 12%. In fact, it has missed estimates in two of the trailing four quarters and met in the other two, bringing the average surprise to negative 5.18%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Fogo de Chao specializes in fire-roasting high-quality meats, using the centuries old Southern Brazilian cooking technique of churrasco. It offers several varieties of meat − beef, lamb, chicken, pork and seafood − to suit the palate of diners. The company’s unique South American style of cooking on an open flame has helped it gain enormous popularity.
Fogo de Chao’s third quarter has historically been the lowest seasonal quarter in terms of both total revenue and earnings per share. The to-be-reported quarter is thus likely to be affected by this seasonality as well.
The top line in the third quarter should benefit from initiatives like menu innovation, marketing through various channels, re-imaging of restaurants and unit expansion efforts.
Meanwhile, higher labor costs and costs related to sales initiatives are projected to keep third-quarter profits under pressure. A challenging sales environment in the restaurant industry space is likely to hurt comps in the to-be-reported quarter. Also, foreign currency fluctuations may further hurt top-line growth.
FOGO DE CHAO Price and EPS Surprise
FOGO DE CHAO Price and EPS Surprise | FOGO DE CHAO Quote
Earnings Whispers
Our proven model does not conclusively show that Fogo de Chao is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks ESP: The company has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 15 cents.
Zacks Rank: Fogo de Chao has a Zacks Rank #3. This when combined with a 0.00% ESP makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few companies in the restaurant industry which, per our model, have the right combination of elements to post an earnings beat this quarter:
Dick’s Sporting Goods, Inc. (DKS - Free Report) has an Earnings ESP of +4.76% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Wendy’s Company (WEN - Free Report) has an Earnings ESP of +10% and a Zacks Rank #2.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +15.39% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>