Wingstop (WING) reported better-than-expected earnings and sales late Monday with Texas Roadhouse (TXRH) missing on per-share profit. Wingstop stock was little changed late while fellow top restaurant stock Texas Roadhouse sold off.
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Restaurant stocks had been faring well, with McDonald's (MCD) stock breaking out last week after topping estimates.
Wingstop Earnings
Estimates: Wall Street expected earnings per share to spike 12% to 19 cents, according to Zacks Investment Research. Revenue was seen jumping 46% to $38 million. Systemwide same-store sales are seen rising 4.1% overall, according to Consensus Metrix. They are seen ticking up 2.8% at company-owned outlets and 4.3% at franchise stores.
Results: Wingstop earnings rose to 21 cents a share as revenue grew 15.5% to $38.246 million. Same-store sales swelled 6.3%.
Outlook: Wingstop raised its full-year EPS target by 5 cents, to 85 cents, in line with analyst views.
Wingstop Stock
Wingstop stock was essentially flat in initial after-hours action. Shares closed down 3.2% to 65.05 on the stock market today, continuing to hit resistance at their 50-day average.
Wingstop stock is extended from a 12-week flat base, MarketSmith analysis shows. It's relative strength line remains near an all-time high.
Investors should wait for a new base to form before investing in Wingstop stock.
SunTrust Robinson Humphrey analyst Jake Bartlett said same-store sales have been driven by menu pricing, incremental advertising, digital order and pickup, and deliveries.
Texas Roadhouse Earnings
Estimates: Analysts expected Texas Roadhouse earnings to climb 26% to 54 cents as revenue grew 9% to $592 million. Systemwide same-store sales are seen rising 4.3% overall. They are seen swelling 4.7% at company-owned outlets and 2.1% at franchise stores.
Results: Texas Roadhouse earnings per share appeared to dip to 40 cents. Revenue rose 10% to $594.595 million. Same-store sales climbed 5.5% at company-owned restaurants and 4.2% at franchise locations.
Outlook: Same-store sales at company-owned restaurants rose 4% through the first four weeks of Q4.
Texas Roadhouse Stock
Shares tumbled 9.8% to 60.26 late. Texas Roadhouse closed down 0.5% to 66.81. The IBD 50 stock has been working toward a 75.34 buy point from a seven-week flat base. It is currently trailing its 50-day moving average, which is a bearish sign, but a positive earnings report could see the stock retake this key technical benchmark.
Wells Fargo analyst Jon Tower, who rates the stock market perform with a 60 target, sounded cautious heading into earnings.
"With the company likely sticking to its long-term philosophy of sacrificing short-term profit and margins to build long-term customer loyalty and traffic, we think the chance of any meaningful EBITDA or EPS upside in the quarter is low," he said in a research note. "Furthermore, we are concerned that when industry trends decelerate (perhaps as early as the fourth quarter), the stock's multiple (near a four-year high) will contract as top-line, bottom-line and cash-flow growth (decelerates) from today's elevated levels."
According to Tower, the stock's risk-to-reward ratio is more attractive for investors when it is priced in the low to mid-50s.
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The post Wingstop Earnings Fly Past Views; Texas Roadhouse Falls Short appeared first on Investor's Business Daily.
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