Quarterly reports continue to roll out this week, with results due from Allstate Corp. (ALL), Coca-Cola Co. (KO), Marriott International Inc. (MAR), Molson Coors Brewing Co. (TAP), New York Times Co. (NYT), Pepsico Inc. (PEP), Sprint Nextel Corp. (S), Viacom (VIA), Walt Disney Co. (DIS) and many others. Here's a look at a few of the companies that analysts surveyed by Thomson Reuters expect to be the biggest earnings gainers this week.
Analysts are looking for Coinstar Inc. (CSTR), which distributes coin-counting, DVD-rental, and other self-service kiosks, to report that its fourth-quarter earnings more than doubled from a year ago to $0.32 per share. Revenue for the three months that ended in December is expected to have jumped 26.1% to $329.2 million. The analysts' forecast for the full year calls for earnings of $0.94 per share (+46.8%) on $1.2 billion in revenue (+25.9%). Coinstar has beat earnings estimates in the past three quarters, by as much as six cents per share.
Chipotle Mexican Grill (CMG), whose colleagues include Burger King (BKC) and Yum! Brands (YUM), saw a nice rally on Friday. It closed up over 6%. Volume was very active. The stock is several dollars short of the 52-week high.
According to Benzinga.com, Morgan Stanley upgraded the restaurant chain to overweight status. Furthermore, an attractive prediction on price has been proffered by the firm: $111. Considering that the stock had a value of $91.89 per share at the end of Friday's session, I'd say buying now and riding the company to $111 would represent a decent trade.
Despite largely positive corporate earnings reports, investor caution has set upon Wall Street. For the third straight day stocks are set to move into negative territory, with futures showing the three major U.S. indexes heading lower ahead of Thursday's opening bell.
Some blamed Wednesday's near 1% drops in the Dow Jones industrial average and the S&P 500 on a late-day sell-off driven by the latest Beige Book survey from the Federal Reserve that showed the economy is ever so slowly emerging from recession -- too slowly, it would seem, for investors.
Burger King Holdings Inc. (NYSE: BKC) announced plans Wednesday to overhaul its 12,000 locations worldwide. The fast-food giant is seeking a sleeker, futuristic look that includes LCD-screen menus, rotating chandeliers, and corrugated metal and brick accents (see pictures at the above link) on the inside, as well as metal canopies and additional signs on the exterior.
The new upscale design, called 20/20, is expected to cost franchisees between $300,000 to $600,000 per restaurant. Some 60 locations have already been remodeled, including in Miami, Mexico City, Edinburgh, and Shanghai, and 75 more are expected to be completed by the end of 2010. All new restaurants will be built using the 20/20 design.
One of the first movers seeing an uptick in spending due to increased consumer confidence is the restaurant space. Only a few diehards really like to stay home and cook. Dining out is a great way to escape. Even better is going to a restaurant for a meal that's affordable.
The fact that dining has suffered during this recession is indicative of how bad things really have been.
Given that confidence is rising, it's no surprise then that Landry's Restaurants(NYSE: LNY) has almost tripled in value since hitting bottom in early March.
Baird upgraded Nike (NYSE: NKE) to Outperform from Neutral on expectations the company will benefit from the drop in the U.S. dollar and continued solid trends in athletic footwear. The firm raised its target on shares to $69 from $61.
Deutsche Bank upgraded Temple-Inland (NYSE: TIN) to Buy from Hold as it believes the company is well positioned for cyclical turnaround in the Paper/Building Products space. The firm raised its target on shares to $19 from $11.
Goldman upgraded Diageo (NYSE: DEO) to Buy from Neutral to reflect the current valuation and the company's exposure to emerging markets.
Deutsche Bank (NYSE: DB) was upgraded to Hold from Sell at ING Group.
Merriman upgraded NetApp (NASDAQ:NTAP) to Buy from Neutral after channel checks indicated the storage market is bottoming out in Q1. The firm thinks NTAP is well positioned heading into FY10 and could be an attractive takeout target for the likes of Hewlett-Packard (NYSE:HPQ), IBM (NYSE:IBM), or EMC (NYSE:EMC).
Goldman added Dr. Pepper Snapple (DPS) to its Conviction Buy list citing valuation and favorable U.S. soda trends. The firm has a $23 target on shares.
Baird said Inegrys Energy's (NYSE:TEG) decision to wind down or exit its profitable non-regulated energy marketing business lowers business risk and improves financial flexibility. The firm upgraded shares to Outperform from Neutral.
Yum! Brands (NYSE:YUM) was raised to Overweight from Neutral at JP Morgan.
The operator of more than 830 quick service Mexican restaurants said it earned $17 million, or 52 cents per share, in the quarter. That is compared to earnings of $17.5 million, or 53 cents per share, in the year-ago period.
Chipotle (NYSE: CMG) closed at $51.31. CMG is scheduled to report Q4 on February 11. CMG February call option implied volatility is at 82, puts are at 91; above its 26-week average of 57, according to Track Data, suggesting larger price movement. CMG puts are more expensive than puts because CMG is difficult to borrow.
Buffalo Wild Wings (NASDAQ: BWLD) closed at $22.67. BWLD, an operator and franchisor of 564 restaurants, is scheduled to report Q4 EPS on February 11. BWLD February 22 straddle is priced at $3.95, March 22 straddle is priced at $5.20. BWLD February option implied volatility is at 117, March is at 85; above its 26-week average of 80, according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
As the reigning king of the fast food industry, McDonald's Corp. (NYSE: MCD) has consistently demonstrated its adroitness in addressing changing economic conditions and consumer preferences.
The company's fourth-quarter earnings report provided a stark testimonial to the effectiveness of McDonald's strategy and management. Reporting earnings of 87 cents per share for the quarter, MCD exceeded the 2007 fourth-quarter results after adjusting for a 2007 tax bonus to earnings of 33 cents per share.
The company reported a 3% drop in revenues for the quarter. Excluding currency exchange rates, the global company reported an increase in revenues of 5% for the period.
With the economy in the toilet, a lot of people are reluctant to go and spend big on restaurant cuisine.
By itself that would be a good reason not to invest in restaurant companies. But restaurant stocks have been absolutely smoked of late, so you have to wonder how much of the bad news is already priced in. Take a look:
DineEquity (NYSE: DIN), parent company of IHOP and Applbee's: closed on Friday at $11.13, 83% off its 52-week high.
CKE Restaurants (NYSE: CKR), parent company of Carl Jr.'s and Hardee's: closed Friday at $8.88, 47% off its 52-week high.
Starbucks (NASDAQ: SBUX): closed Friday at $11.08, 59% off its 52-week high.
With very few exceptions, restaurant stocks have been pulvarized of late. It's true that the bad times may last awhile longer but in the grand scheme of things, a few quarters -- or even a few years -- of poor sales and earnings have very little bearing on the creation of long-term shareholder value. That is if a company is well-capitalized and has little leverage.
I think bargain hunters who buy and hold restaurant stocks trading at low price/earnings ratios with very little debt and strong brands will do quite well here.
One stock to avoid: DineEquity, which trashed its balance sheet with the Applebee's acquisition and may have to head back to the market to raise cash at the expense of current shareholders. The Wall Street Journalreports (subscription required) on unprecedented promotions and store closings for some leading chains.
With closings and consolidation, well-managed companies with good balance sheets should come out of this mess OK, and investors who get in at depressed prices should prosper.
Manic Monday on Wall Street Investors deal with a Lehman bankruptcy, the sale of Merrill Lynch to BofA, and a possible AIG restructuring. Mondays better not get any more manic than this. Wall Street's Perfect Storm - BusinessWeek
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
Restaurant giant Yum Brands (NYSE: YUM) owns and operates several popular fast food chains like Pizza Hut, KFC, A&W, and of course Taco Bell. The Taco Bell chain features lower quality, packaged ingredients, frozen meats, and poultry, and all at low prices. Fair enough, it's a fast food joint and the food overall is okay-to-good -- depending on one's mood!
The Taco Bell dog featured in the advertising campaign that ended in 2000 was a Chihuahua, an almost rat-like creature. Cute? Yes. Annoying? Yes. I know because my family has a Chihuahua we call Gracie! The Hispanic community felt that the Chihuahua represented an ethnic stereotype. The dog was voiced-over with a Hispanic accent and the implication was very clear. Many Hispanics were especially annoyed because they do not consider Taco Bell's food authentic "home cooking."
Quarterly reports continue to roll out this week, with results due from Allstate Corp. (ALL), Coca-Cola Co. (KO), Marriott International Inc. (MAR), Molson Coors Brewing Co. (TAP), New York Times Co. (NYT), Pepsico Inc. (PEP), Sprint Nextel Corp. (S), Viacom (VIA), Walt Disney Co. (DIS) and many others. Here's a look at a few of the companies that analysts surveyed by Thomson Reuters expect to be the biggest earnings gainers this week.
Chipotle Mexican Grill (
Despite largely positive corporate earnings reports, investor caution has set upon Wall Street. For the third straight day stocks are set to move into negative territory, with futures showing the three major U.S. indexes heading lower ahead of Thursday's opening bell.
Last week, 
One of the first movers seeing an uptick in spending due to increased consumer confidence is the restaurant space. Only a few diehards really like to stay home and cook. Dining out is a great way to escape. Even better is going to a restaurant for a meal that's affordable.
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Investors were sufficiently impressed with 
Chipotle
As the reigning king of the fast food industry, 
With the economy in the toilet, a lot of people are reluctant to go and spend big on restaurant cuisine.
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