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4 Restaurant Stocks Set to Deliver a Beat This Earnings Season

The restaurant industry’s performance in second-quarter 2020 is likely to reflect the impact of dismal traffic. Notably, the restaurant industry has been grappling with declining traffic for quite some time now, and the pandemic-induced crisis has only aggravated the scenario further.

Moreover, high cost of operations have been a cause of concern for the restaurant giants. Further, sales-building efforts such as promotional activities and a convincing pricing strategy might have weighed on margins.

However, some restaurateurs have been doing well amid the pandemic, on the back of recent partnerships with delivery channels including DoorDash, Grubhub, Postmates and Uber Eats; digital innovation; rollout of self-service kiosks and loyalty programs.

Off-Premise Sales Likely to Increase in Q2

The industry has been benefiting from increase in off-premise sales, which primarily includes delivery, takeout, drive-thru, catering, meal kits, and off-site options such as kiosks and food trucks, owing to the coronavirus crisis. With dining rooms not operating in full capacity in the second quarter on account of the pandemic scenario, off-premise sales have been increasing sharply.

Moreover, restaurant operators have been focusing on driverless delivery systems to augment sales amid the coronavirus-induced scenario. This is anticipated to bring down expenses substantially and ensure safety amid the pandemic as it does away with delivery personnel. Owing to the crisis scenario, consumers have not only been particular regarding the quality and taste of food but are also preferring contactless delivery.

How to Pick the Right Stocks?

Amid a wide number of restaurant stocks, it is by no means an easy task for investors to arrive at stocks that have the potential to deliver better-than-expected earnings.

While there is no foolproof method to pick outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps in identifying stocks that have high chances of surprising in their upcoming earnings announcement. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Here are some restaurant industry players, set to report second-quarter 2020 results, which investors can take a look at.

Papa John's International, Inc. PZZA is slated to release quarterly numbers on Aug 6. The company currently has a Zacks Rank #2 and an Earnings ESP of +10.46%. The Zacks Consensus Estimate for its quarterly earnings is pegged at 40 cents, suggesting growth of 42.9% from the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Papa Johns International, Inc. Price and EPS Surprise

Papa Johns International, Inc. Price and EPS Surprise

Papa Johns International, Inc. price-eps-surprise | Papa Johns International, Inc. Quote

Jack in the Box Inc. JACK is scheduled to report quarterly results on Aug 5. The company currently has a Zacks Rank #2 and an Earnings ESP of +2.11%. The Zacks Consensus Estimate for its quarterly earnings stands at $1.01, suggesting a decline of 5.6% from the prior-year quarter.

Jack In The Box Inc. Price and EPS Surprise

Jack In The Box Inc. Price and EPS Surprise

Jack In The Box Inc. price-eps-surprise | Jack In The Box Inc. Quote

Texas Roadhouse, Inc. TXRH is slated to report financial numbers on Aug 3. The company currently has a Zacks Rank #3 and an Earnings ESP of +0.76%. The Zacks Consensus Estimate for its quarterly earnings is pegged at a loss of 54 cents, against earnings of 63 cents reported in the prior-year quarter.

Texas Roadhouse, Inc. Price and EPS Surprise

Texas Roadhouse, Inc. Price and EPS Surprise

Texas Roadhouse, Inc. price-eps-surprise | Texas Roadhouse, Inc. Quote

Chuy's Holdings, Inc. CHUY is scheduled to report quarterly results on Aug 6. The company currently has a Zacks Rank #3 and an Earnings ESP of +6.74%. The Zacks Consensus Estimate for bottom line is pegged at a loss of 32 cents, against earnings of 42 cents reported in the year-ago quarter.

Chuys Holdings, Inc. Price and EPS Surprise

Chuys Holdings, Inc. Price and EPS Surprise

Chuys Holdings, Inc. price-eps-surprise | Chuys Holdings, Inc. Quote

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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