#$wen

[fivestocksthat]

Analysts’ forecasts for 5 top fast food stocks

What do Wall Street analysts think about top fast food stocks? We use analyst target price estimates and ratings to get a view of the Street's opinions on MCD, YUM, CMG, QSR & WEN.

[estimize]

5 Stocks to Watch that Report Earnings Tomorrow

Arista Networks (ANET): Arista Networks roared through 2016 only to hit a massive snag at the start of the new year. In late January, the CBP revoked an earlier court ruling over an ongoing patent infringement case between Arista and Cisco. Shares subsequently took a sharp dive but since recovered most of the losses. For the most part, analysts expect the company to continue its trend higher in the fourth quarter, with forecasts for a 30% jump on the top line and 5% on the bottom. A 5% increase in earnings would mark the first quarter since the company went public that earnings failed to reach double digit growth. From a product standpoint Arista continues to find support from cloud networking ports and switches, which topped nearly 10 million cumulative shipments in the third quarter.

What are you expecting for ANET? Get your estimate in here!

MGM Resorts (MGM): Shares of MGM soared 61% in 2016 largely on the back of improving travel trends in key markets such as Las Vegas. Improving employment rates and increasing tourism numbers in the region helped MGM record strong occupancy rates and RevPAR, thereby supporting top line growth. That said, ongoing volatility in Macau over the past few quarters wound up offsetting some of the gains at other resorts. Analyst’s believe a revival is underway in Macau and will boost performance in the quarter to be reported. But Las Vegas Sands weak fourth quarter results at the end of January suggests otherwise. The success of tomorrow’s report hinges on whether travel to Macau improved or simply stayed the same during the fourth quarter.

What are you expecting for MGM? Get your estimate in here!

Alexion Pharmaceuticals (ALXN): Biotech companies are some of the biggest crapshoots of earnings season, with Alexion being no different. Top line growth exceeded double digits for 6 consecutive quarters but that couldn’t help investors who experienced an 8% decline in share value over the past 12 months. Alexion’s two main drugs, Soliris and Strensiq continues to gain traction in core territories including U.S., European and Japanese markets on the back of an increasing patient population. Its newest drug, Kanuma, showed progress throughout its early stage launch in U.S. and German markets. Investors will be keen on management's comments of the Trump administration’s hardened stance on the industry and its potential impact on future performance.

What are you expecting for ALXN? Get your estimate in here!

Wendy’s (WEN): Analysts are asking “Where’s the Growth” after Wendy’s posted 3 consecutive quarters of double digit losses and nearly 8 quarters of negative sales growth. And yet the stock soared 50% in the past 12 months due to a string of positive same store sales growth, ongoing efforts to overhaul the menu, and an emphasis on value offerings like the 4 for 4 deal. A large portion of the overall revenue declines come amid a system wide optimization effort intended to reduce the number of company operated restaurants. Furthermore soft consumer spending and a broad shift away from greasy burgers puts greater pressure on financial performance and may hurt traffic trends.

What are you expecting for WEN? Get your estimate in here!

Hyatt Hotels (H): Hyatt stands to build on the success of the past 3 quarters owing to  increased demand in U.S. markets and improving travel trends. Revenue per available room (RevPAR), hotel operators key performance metric, grew 3.8% in domestic markets and 2.5% systemwide during the third quarter. The company continues to open new hotels in its broader goal of expanding to global markets like China and India. In Q3, the company opened 11 locations and intends to tack on 20 more in the quarter to be reported. Nonetheless, increasing competition, macroeconomic turmoil and consumer’s preference for value channels puts pressure on performance, namely margins.

What are you expecting for H? Get your estimate in here!

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[estimize]

Cheap burgers are still selling, just not at McDonald’s

McDonald’s Corp (MCD) Consumer Discretionary - Hotels, Restaurants & Leisure | Reports January 23, Before Market Opens

Key Takeaways

The Estimize consensus is calling for earnings per share of $1.45 on $6.05 billion in revenue, 4 cents higher than Wall Street on the bottom line and $50 million in revenue

McDonald’s faces tougher comparisons as McPick 2 and All Day Breakfast sales dry up

This year the focus shifts to growing the McCafe brand, expanding internationally, and revamping some of its classic menu items

What are you expecting for MCD? Get your estimate in here!

McDonald’s success in 2016 was largely the result of two key promotional campaigns that drove earnings and sales higher; the McPick 2 and all day breakfast. Both initiatives helped attract a wider audience and were more appealing to value-focused consumers. This year the focus shifts to growing the McCafe brand, expanding internationally, and revamping some of its classic menu items. Many of these initiatives, which are already underway, provide a much needed level of support to McDonald’s fourth quarter report scheduled to take place early Monday morning.

The consensus estimate at Estimize pegs earnings for the golden arches at $1.45 per share, about 13% higher than the same period last year. That estimate edged higher by 3% since the most recent report at the end of October. Revenue for the period is expected to drop by 5% to $6.05 billion, marking 8+ consecutive quarters of negative top line growth. Americans’ newfound adoration for healthier lifestyles clearly put a dent in McDonald’s sales growth in recent years.

Still, the stock continues to make gains. In the past 3 months share prices increased by 10% on increased business optimism, but during the earnings period the stock historically doesn’t move. If the numbers come in strong though, shareholders can expect to receive a healthy boost. McDonald’s strategy to boost sales in the last year included greater marketing promotions, newer menu items, expanding the mobile app, and improving the customer experience. More specifically the McPick 2, All Day Breakfast and a new McNugget recipe helped boost comparisons despite a weak fast food industry. In the third quarter same store sales rose by 3.5% with across the board improvements in both the global and domestic sector. Sales in the United States gained 1.3%, mostly from the 3 menu promotions.

Looking forward, McDonald’s faces tougher comparisons as McPick 2 and All Day Breakfast sales dry up. To offset any lost sales, McDonald’s plans on expanding its McCafe brand by opening standalone stores and offering $1 any size coffee. These changes directly challenge Starbuck and Dunkin Donuts long held dominance in the coffee space.

The company is also focused on incorporating technology to improve the customer experience with the mobile app and self order kiosks. McDonald’s strong brand appeal along with a host of new initiatives in the pipeline presents an opportunity for a strong fiscal 2017.

That said, changing consumer tastes plus increasing competition pose a significant near term headwind. Fast food operators, Yum Foods and Wendy's came on strong to end the year while Shake Shack and the rest of the fast casual industry continue to chip away at McDonald’s burger dominance. Do you think MCD can beat estimates? There is still time to get your estimate in here!

Photo Credit: George

[estimize]

5 Stocks to Watch Before the Market Opens on Election Day

CVS Caremark (CVS): The healthcare industry has been hit hardest ahead of the election with both nominees having taken a hardened stance on the sector. Shares of CVS are trading 15% lower this year despite a string of robust year over year comparisons. Analysts are expecting the retail drug chain to maintain its robust growth of the past few quarter and deliver a 22% increase on the bottom line and 17% on the top. The recently completed acquisitions of Omnicare and Target Pharmacy, while still in the integration process, are expected to provide new support to top line growth. Profitability and same store sales should continue to be adversely impacted by the introduction of generic drugs. In the second quarter genericization dragged down pharmacy same store sales by 355 basis points. The potential merger of Rite Aid and Walgreens coupled with the off chance that Amazon opens up convenience store could severely impact CVS’ long term outlook. In the meantime, analysts are optimistic that CVS can maintain its robust growth of the past few quarters.

Valeant Pharmaceuticals (VRX): Valeant was one of the best performing stocks on Wall Street in the first half of 2015, but over the past 12 months  and a price gouging scandal, shares have bottomed out. After reaching highs of over $250 per share, the stock has plummeted over 90%, to all time lows, where it is today.  The ongoing freefall forced management to oust now former CEO Michael Pearson, who led the company through the thick of it's price hikes. With several new board members, one being infamous hedge fund manager Bill Ackman, and a new CEO, Valeant is still fumbling. Its most recent report delivered a nearly 50% decline on the bottom-line and 10% on the top. With no signs of improving anytime soon, the upcoming quarter is shaping up to be another disaster.

SeaWorld Entertainment (SEAS): Financial performance and share prices have trended lower in recent quarters driven by lower traffic trends and a growing list of negative publicity surrounding animal cruelty. In the second quarter both earnings and revenue delivered 5% declines from a year earlier blamed on a decline on Latin American attendance, softness in the Orlando market, and an unfavorable storm season. Ongoing efforts to ease these concerns through promotional campaigns and jump start traffic trends haven’t gained traction and will likely take its toll on the bottom line. Additional investments into new rides and extending hours of operation haven’t swayed analysts expectations which are calling for a 7% decline in earnings and 3% in sales.

Wayfair (W): Wayfair is falling victim to a theme plaguing many recent IPOs: mounting losses and decelerating revenue growth. In the second quarter the ecommerce platform posted a 187% decline on the bottom line and has yet to deliver a profitable quarter since going public in late 2014. Over this time revenue growth has dropped significantly with expectations  of delivered a 42% increase in the third quarter. During the quarter Wayfair introduced a number of new partnerships and initiatives to help reenergize margins and traffic trends. Some of these include deals with HGTV and A&E Networks along with a new augmented reality app will have enhance the consumer's experience.  

Carrols Restaurants Group (TAST): Strong results from McDonald’s this earnings season sets a favorable tone for the remaining fast food chains which include Carrol’s and Wendy’s this week. Carrols Restaurant Group is best known for owning and operating over 725 Burger King stores in the United States. The company continues to be in the process of acquiring more Burger King locations. During the third quarter Carrol’s acquired 10 additional stores that are expected to support the top line. Burger King’s strong brand, frequent menu innovation and ongoing promotional initiatives have proved resilient despite challenges in the quick service industry. Analysts at Estimize are expecting the continued addition of new stores to carry financial performance to a 25% increase on the bottom line and 12% on the top.

How do you think these names will report? Be included in the Estimize consensus by contributing your estimates here!

[dragonflycap]

Don't Resist the Baconator, Buy Wendy's

Wendy's has always been there in the background, watching the burger wars between McDonald's and Burger King.  Tossing in some chili here and backed potatoes there.  Perceived higher quality if not for real, I do not know.  Bu the Baconator is not an in the background type of product.  This is an in your face right to the heart of America burger.  They even advertise that it has no vegetables to get in the way!  'Merica!!!

And it seems to be working.  The stock had been wallowing as it carves out a bottom after a third pullback.  But with deeper observation this pullback is making a second higher low after a higher high.  And the price Wednesday moved back over the 200 day SMA and up to resistance.  Is it ready for more.  Yes it is!

The momentum indicators are bullish and rising.  Getting more bullish.  And the Bollinger Bands® are opening to the upside as the price pushed over short term resistance.  A pushover the 10.40 level would suggest another move to a higher high above the 11.30 reached in May.  Can you resist the Baconator now?

Want to learn more about Dragonfly Capital Views? Dragonfly Capital Views Performance Through August 2016 and sign up here

[estimize]

3 Stocks to Watch Before the Market Opens Tomorrow

KORS: After weak earnings from Kate Spade and Coach, it appears likely that Michael Kors surging stock could hit a roadblock tomorrow. Shares of the luxury brand have risen 25% this year on consecutive beats and strong comparables. Both KATE and COH cited higher discounting and promotions for its poor quarterly results. Similar sentiment is likely to be echoed in KORs report tomorrow. The retail sector has been choppy lately and with a large exposure to volatile international markets both earnings and revenue could see its first downturn in over a year. Michael Kors continues to invest heavily in new store openings, expanding outlets and building its omni channel capabilities to remain competitive in the long term.

RL: Similar to KORS, recent reports from luxury brands doesn’t not bode well for Ralph Lauren. However, unlike KORS, Ralph Lauren stock has been beaten down lately. In the past 12 months shares have dropped over 20%. Despite a couple beats in the past few quarters, comparables continue to turn negative. Last quarter featured a 38% decline on the bottom line and 1% on the top. The company’s key problems include too many brands in retail stores, over reliance on department stores, large inventory hangover and high operating expenses. The company’s new CEO has actively addressed these issues and has implemented a new strategy but it certainly isn’t a quick fix.

WEN: Wendy’s is a part of a group of fast food names that has bounced back in recent months. The stock is up 9% year to date thanks to cost saving initiatives and improving bottom line growth. Revenue, on the other hand, is expected to continue to decline for the foreseeable future. Wendy's recently transitioned its company owned restaurants to franchise based models. Furthermore, a rise in beef prices since the beginning of the year, and other food costs is expected to put pressure on margins. Fortunately, international expansion, promotional campaigns and frequent menu innovations should offset some of the downturn.

How do you think these names will report? Be included in the Estimize consensus by contributing your estimates here!

[estimize]

These 3 Stocks are Serving up Strong Earnings

The trends that once favored fast casual chains like Chipotle and Panera are slowly shifting back to the fast food and casual dining sector. The shift has favored big names like McDonald’s and Darden Restaurants who have seen consistent growth after management changes in the past 2 years. And for those not named Chipotle, fast casual operators haven’t had it all that bad. In fact, the new face of fast casual, Shake Shack, is coming off a superb first quarter that proved growth wasn’t decelerating as quickly as previously thought. As discretionary spending continues to increase this should drive the food industry to more fruitful earnings.

McDonald’s Corp (MCD) Consumer Discretionary – Hotels, Restaurants & Leisure

The golden arches are an iconic piece of American history but that hasn’t reflected how the company has performed in the past 5 years. McDonald’s struggles came at a time when fast casual and healthy eating were the new craze. It wasn’t until McDonald’s appointed Steve Easterbrook in the middle of last year that the company began to show signs of life. In the past 12 months, the stock is up 25% supported by earnings growth turning positive. Its resurgence has been largely driven by successful marketing campaigns and new value promotions. The McPick 2 and other limited time offerings have been key in boosting comparable store sales and customer traffic. McDonald’s has also made it a point to improve the appearance of its stores through renovations, taking a page from the fast casual industry. Still, one analyst believes that this rebound will be short lived. Last week an analyst at Nomura downgraded the stock to neutral from buy, sending the stock tumbling. The Estimize community has reacted negatively to the news, cutting estimates for the second quarter over the past few weeks. The consensus data is looking for earnings per share of $1.36 on $6.29 billion in revenue, reflecting a 10% increase on the bottom line and 3% decline on the top.

Shake Shack (SHAK) Consumer Discretionary – Hotels, restaurants & Leisure

Following Chipotle’s health scares late last year, Shake Shack emerged as the clear face of the fast casual industry. With just over 100 locations worldwide, the burger chain garners an immense amount of media attention for its innovative and limited time offerings. The recent launch of the Chick’n Shack at all domestic locations was a key driver of traffic and comparable store sales last quarter. The report put an end to the argument that the company could not sustain its rapid growth. Reported earnings of 8 cents on 54 million in revenue exceeded both the Wall Street and Estimize consensus. Expectations are high for the second quarter. The Estimize consensus is looking for earnings per share of 14 cents on $62.75 million in revenue, reflecting a 49% increase on the bottom line and 29% on the top. The stock typically makes large gains prior to a report but tends to turn negative after results are released. Shares are down nearly 45% in the past 12 months.

Darden Restaurants (DRI) Consumer Discretionary – Hotels, restaurants & Leisure

Soup, Salad and Breadsticks aren’t only tasty for customers but investors as well. Darden Restaurants, which operates Olive Garden amongst other brands, has been on the rise over the past few years. After Starboard Value overthrew the company’s board and implemented its own people and processes, Darden has surged. Shares are up nearly 10% from a year earlier, 7% on the year, supported by favorable comparisons. Earnings have maintained double digit gains and it's only a matter of time before revenue reaches those growth rates. Early indications look as if Darden will be at it again with its fourth quarter results. The Estimize consensus is looking for earnings per share of $1.09 on $1.82 billion in revenue, reflecting a 7% increase in earnings. Regardless if you prefer fast food, fast casual or casual dining, it appears as if the restaurant industry will be serving up strong earnings this earnings season.

How do you think these names will report this week? Be included in the Estimize consensus by contributing your estimates here!

Photo Credit: Mike Mozart