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October 11, 2012
Restaurants Analyst Buckley, along with industry consultant Malcolm Knapp, discuss Mr. Knapp's views of the current consumer environment, as well as his outlook for restaurants, on an Analyst/Industry conference call. Relevant covered companies CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, THI, WEN and YUM may be included on the Analyst/Industry conference call to be held on October 15 at 11 am.
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November 13, 2015
12:34 EDTYUMOn The Fly: Top stock stories at midday
Stocks on Wall Street were lower at midday following worse than expected retail sales data in the U.S. and a report showing that the Eurozone's economic growth slowed last quarter. ECONOMIC EVENTS: In the U.S., retail sales rose 0.1% in the month of October, versus expectations for an increase of 0.3%. When autos and gas are removed, the core reading was up 0.3%, versus expectations for a rise of 0.4%. Producer prices fell 0.4%, versus expectations for them to be up 0.2%. When food and energy are removed, the core reading was down 0.3%, versus expectations for it to be up 0.1%. Business inventories grew 0.3% in September while sales were flat compared to August. Consumer sentiment, as measured by the preliminary print from the University of Michigan survey, improved 3.1 points to 93.1 in November, which was better than the 91.5 reading that was expected. In Europe, data showed that eurozone's economy grew by just 0.3% in the third quarter, which was a slowdown from the 0.4% GDP growth recorded three months earlier and weaker than the 0.4% consensus growth forecast. COMPANY NEWS: Shares of retailers broadly declined on Friday morning following the weaker than expected retail sales data reported by the government as well as third quarter earnings reports from Nordstrom (JWN) and J.C. Penney (JCP). Each of the aforementioned department store operators slid following their reports, as did Macy's (M) and Kohl's (KSS), which reported on their own results earlier in the week. TJX Companies (TJX) and Ross Stores (ROST), which are both scheduled to report quarterly earnings next week, were also among those caught up in the weakness... Shares of Mylan (MYL) jumped 13% after the company's offer to acquire Perrigo (PRGO) failed, ending a seven-month fight between the two drugmakers. Perrigo Chief Executive Officer Joseph Papa said he was "delighted" that his company's shareholders rejected the offer and the company added that it will immediately commence its previously announced $2B share buyback program, but its shares slid 7% in the wake of the shareholder vote... Cisco (CSCO) fell 6% after its first quarter earnings and revenue beat expectations but its guidance for the new quarter disappointed. A number of analysts that had been bullish on the name trimmed their price targets in response but also recommended the post-earnings weakness as a buying opportunity. MAJOR MOVERS: Among the notable gainers was Syngenta (SYT), which rallied 5% after Bloomberg reported that the company rejected an initial $42B offer from ChemChina. Also higher was Yum! Brands (YUM), which gained 4% after it reported positive year over year same store sales growth for its China division in October. Among the noteworthy losers was GameStop (GME), which fell 14% after its stock was downgraded at Pacific Crest and NPD estimated that video game software sale declined 3% last month compared to the same month of last year. Also lower was Fossil (FOSL), which plunged 33% after the watchmaker gave lower than expected profit guidance for the upcoming quarter and said it continues to expect this fiscal year's results to be "significantly" negatively impacted by foreign currency changes. INDEXES: Near midday, the Dow was down 88.19, or 0.51%, to 17,359.88, the Nasdaq was down 34.22, or 0.68%, to 4,970.86, and the S&P 500 was down 9.24, or 0.45%, to 2,036.73.
11:45 EDTCMGEl Pollo LoCo sinks to 52-week low after cutting FY15 same store sales guidance
Shares of quick-service restaurant operator El Pollo LoCo (LOCO) are plunging after the company cut its fiscal 2015 same-store sales outlook and narrowed its fiscal 2015 profit view. WHAT'S NEW: Thursday night after the close, El Pollo LoCo reported third quarter adjusted earnings per share of 18c, beating analysts' consensus estimates of 15c, and revenue of $88.9M, missing the consensus of $90.4M. For the quarter, system wide SSS increased 0.6%, company owned SSS were flat, franchise SSS rose 1.1%, and adjusted EBITDA increased 9.9% to $16.6M. Chief Executive Officer Steve Sather noted that Q3 results represented the company's 17th consecutive quarter of system-wide comparable restaurant sales growth as well as pro forma net income growth of over 40%. He added that the company's new restaurant pipeline was, "strong and growing stronger." GUIDANCE: Looking ahead, El Pollo LoCo cut its FY15 system-wide comparable restaurant sales growth view to approximately 1.7% from 3%. It also lowered its outlook for openings of new company-owned restaurants to 13-15 from 16, and openings of new franchised restaurants to 5 from 8. FY15 adjusted EBTIDA guidance was cut to $64M-$66M from $65M-$67M. Due to the revised assumptions, the company narrowed its FY15 pro forma diluted EPS view to 67c-69c from 67c-71c, compared to the consensus of 68c. ANALYST REACTION: Research firm Baird downgraded El Pollo Loco to Neutral from Outperform to reflect reduced visibility, uncertain comps outlook and possible downward bias to earnings if top-line trends do not improve. Baird lowered its price target to $12 from $18 on El Pollo Loco shares. PRICE ACTION: In late morning trading, El Pollo Loco fell $1.30, or about 11.25%, to $10.22 on nearly four times its average daily trading volume. Earlier in the session, the stock hit a fresh 52-week low of $9.58. Over the past 12 months, the stock is down approximately 70%. OTHERS TO WATCH: Other quick-service restaurants include Fiesta Restaurant (FRGI), down 2.5%, Chipotle Mexican Grill (CMG), down 2.7%, Del Taco (TACO), down 2.15%, Popeyes Louisiana Kitchen (PLKI), down 1.3%, and Bojangles (BOJA), down fractionally.
11:33 EDTCMGStocks with call strike movement; CBS CMG
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10:49 EDTCMGChipotle breaks back below $600 on lower consumer brand perception
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09:39 EDTYUMYum! Brands rises on improving China sales
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09:27 EDTYUMOn The Fly: Pre-market Movers
UP AFTER EARNINGS: Blue Buffalo (BUFF), up 8.2%... Applied Materials (AMAT), up 3.8%... Planet Fitness (PLNT), up 9.8%... Lipocine (LPCN), up 16.2% after reporting quarterly results and that the FDA has assigned a Prescription Drug User Fee Act goal date of June 28, 2016. ALSO HIGHER: Mylan (MYL), up 10.9% after Perrgo (PRGO) shareholders did not tender enough shares for the hostile takeover bid to succeed... Plug Power (PLUG), up 7.3% after entering into a strategic supply agreement with 3M (MMM)... Yum! Brands (YUM), up after reporting that October China Same-Store Sales are up 5%. DOWN AFTER EARNINGS: Fossil (FOSL), down 24.5%... Fossil (JWN), down 20.6%... El Pollo LoCo (LOCO), down 15.1%... Cisco (CSCO), down 4.1%.... Tyco (TYC), down 4.1%... J.C. Penney (JCP), down 6.8%. ALSO LOWER: Fitbit (FIT), down 8.4% after 17M share Secondary priced at $29.00... GameStop (GME), down 8% after being downgraded to Sector Weight from Overweight at Pacific Crest... Lions Gate (LGF), down 2.6% after 3.4M share Spot Secondary priced at $39.43... Perrigo is down 10.5% after shareholders did not tender enough shares for the hostile takeover bid to succeed.
09:21 EDTWEN, MCD, YUMWendy's '4 for $4' a hit, McDonald's promo may be next
An analyst at Citi believes Wendy's (WEN) has seen strong results from its ongoing "4 for $4" promotion, prompting him to add the stock to the firm's Focus List and predict that the company's same-store sales growth this quarter will beat expectations. 4 FOR $4: Under an ongoing promotion that was launched in October, Wendy's offers a junior bacon cheeseburger, four piece chicken nuggets, fries, and a drink for $4. Citi analyst Gregory Badishkanian told investors in a research note this morning that his analysis and talks with those in the fast-food industry suggest that the promotion continues to drive strong results, leading to a rise in transactions at Wendy's with little to no impact on restaurants' average check total. Badishkanian predicts Wendy's will post fourth quarter same-store sales growth of at least 4%, versus the First Call consensus forecast of 2.7% and the 3.3% growth implied by the high-end of the company's fiscal year guidance. INDUSTRY VALUE FOCUS: Wendy's management has emphasized value offerings recently, but other quick service restaurant peers are also increasing their focus on value, Badishkanian noted. The analyst sees a good chance that McDonald's (MCD) will roll-out a "2 for $2" promotion soon, which he believes could have a "modest" impact on Wendy's, but more of an impact on Restaurant Brands' (QSR) Burger King. Badishkanian predicts McDonald's same-store sales growth should accelerate further in the fourth quarter, but not at the expense of Wendy's. He keeps a Buy rating on Wendy's shares with an $11 price target. WHAT'S NOTABLE: Yum! Brands (YUM), which also competes in the quick service food space with its KFC, Pizza Hut and Taco Bell brands, is rallying this morning after reporting last night that its China division's same-store sales grew an estimated 5% in October. PRICE ACTION: Wendy's stock has gained over 5% in the last month, closing yesterday at $9.63 per share. In that same period, McDonald's shares have risen over 8% while Restaurant Brands has declined 3%.
08:03 EDTJACKJack in the Box volatility elevated into Q4 and outlook
Jack in the Box November call option implied volatility is at 69, December is at 42, March is at 34; compared to its 52-week range of 22 to 50, suggesting large near term price movement into the expected release of Q4 results on November 18.
07:30 EDTWENWendy's added to Focus List at Citi
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06:36 EDTCMGChipotle hits lowest consumer perception since 2007, CNBC reports
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November 12, 2015
19:00 EDTYUMOn The Fly: After Hours Movers
UP AFTER EARNINGS: USA Technologies (USAT), up 15.9%... Blue Buffalo (BUFF), up 7.3%... Planet Fitness (PLNT), up 12.3%... Darling Ingredients (DAR), up 8.1%... Applied Materials (AMAT), up 3.8%... Lipocine (LPCN), up 19.9% after reporting quarterly results and that the FDA has assigned a Prescription Drug User Fee Act goal date of June 28, 2016. ALSO HIGHER: Syngenta (SYT), up 14.5% after Bloomberg reported that the company rejected an initial $42B bid from ChemChina... Yum! Brands (YUM), up 4.1% after reporting that October China Same-Store Sales are up 5%. DOWN AFTER EARNINGS: bebe stores (BEBE), down 10.5%... Nordstrom (JWN), down 20.3%... Fossil (FOSL), down 14.7%... Cisco (CSCO), down 4.8%... El Pollo LoCo (LOCO), down 8.7%... Tahoe Resources (TAHO), down 7.2%. ALSO LOWER: Paycom Software (PAYC), down 5.2%... Netflix (NFLX) down 1% after Dow Jones reported that Hulu, a joint venture of Disney (DIS), Comcast (CMCSA, CMCSK), and Fox (FOX, FOXA), is in discussions to sell a stake in the company to Time Warner (TWX)... TJX Companies (TJX), down 4%, Burlington Stores (BURL), down 5.3%, Macy's (M), down 1.6%, Target (TGT), down 1.9%, J.C. Penney (JCP), down 1.4%, and Kohl's (KSS), down 1.3%, after Nordstrom reported quarterly results and cut its fiscal 2015 guidance.
18:48 EDTPNRA, CMG, MCDMcDonald's CEO: Pace of change had slowed within company, NYT reports
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17:23 EDTYUMYum! Brands jumps 4.4% after reporting October China comp sales up 5%
17:19 EDTYUMYum! Brands reports October SSS up 5% year-over-year
Yum! Brands China Division's October same-store sales grew an estimated 5%, comparable to the Division's same-store sales growth of 6% in September. October's results include estimated growth of 10% at KFC and an estimated decline of 9% at Pizza Hut Casual Dining. The company asdded, "We are reiterating our guidance for the fourth quarter of China Division same-store sales growth of 0% to 4%, with positive same-store sales growth at KFC and negative same-store sales at Pizza Hut Casual Dining. As previously stated, same-store sales remain difficult to forecast in China, and our overlaps become more difficult for the balance of year."
07:14 EDTDRIDarden sales trends outperforming, says Oppenheimer
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November 11, 2015
10:23 EDTMCDPiper, UBS say McDonald's can keep rising following analyst day
Analysts were mostly upbeat about McDonald's (MCD) in the wake of the company's analyst day meeting yesterday, with Piper Jaffray recommending that investors buy the stock and UBS saying that the company's momentum is encouraging. However, Sterne Agee CRT kept a Neutral rating on the shares, citing an uncertain outlook in the U.S. and high valuation. BACKGROUND: At its meeting, McDonald's estimated that its systemwide sales would rise 3%-5% in fiscal 2016, with operating income growth of 5%-7%, excluding some items. The company said it expects to return all of its free cash to shareholders over the long-term and reported that its U.S. restaurants were performing well so far in the fourth quarter. The fast food giant announced that it had decided not to seek to form a REIT but would look to become 95% franchised over the longer term. ANALYST REACTION: By franchising more of its restaurants, McDonald's will lower its costs and cause the stock's multiple to expand, wrote Piper Jaffray analyst Nicole Miller Regan. The company is gaining market share and recently implemented strategies that have caused its cash flow to rise, according to Regan, who kept a $130 price target and Overweight rating on the shares. McDonald's operating momentum is building, and its core fundamentals are moving in the right direction, wrote UBS analyst Keith Siegner. The company's same-store sales are rising faster than those of its peers and its margins should rise going forward, the analyst believes. Additionally, the fast food chain's capital structure has become more stable and efficient, which should enable the stock's multiple to rise, said Siegner who raised his price target on the name to $125 from $122 and kept a Buy rating on the shares. Also upbeat was Credit Suisse. McDonald's "tone was clearly positive," as the performance of its U.S. and key international businesses continue to improve, believes the firm, which raised its price target on the name to $128 from $118. However, Sterne Agee CRT was less optimistic. The firm's analyst, Lynne Collier, said she was more positive about the stock following the investor meeting, but continues to believe that the outlook for the company's traffic in the U.S. is uncertain. Additionally, Collier contended that the stock's valuation is reflecting expectations for "a sharp improvement in fundamentals." She kept a Neutral rating on the shares. PRICE ACTION: In early trading, McDonald's rose 0.8% to $114.19.
08:38 EDTMCDMcDonald's price target raised to $128 from $118 at Credit Suisse
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08:14 EDTMCDMcDonald's outlook has improved, says Sterne Agee CRT
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07:38 EDTMCDMcDonald's momentum continues, outlook encouraging, says UBS
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06:36 EDTMCDPiper still a buyer of McDonald's after analyst day
Piper Jaffray analyst Nicole Miller Regan says she remains a buyer of McDonald's following yesterday's analyst day. Management again reiterated confidence in positive global same-store sales trends and their current strategies will lead to strong cash flow, Regan tells investors in a research note. She believes leveraging the company's global franchise network should allow for multiple expansion. The analyst reiterates an Overweight rating on McDonald's with a $130 price target.
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