For Immediate Release
Chicago, IL - October 07, 2015 - Zacks Equity Research highlights Dave & Buster's Entertainment ( PLAY ) as the Bull of the Day and Randgold Resources ( GOLD ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on McDonald's ( MCD ), Chipotle ( CMG ) and Shake Shack ( SHAK ).
Here is a synopsis of all five stocks:
Restaurant stocks have been quite hot lately thanks mainly to improving labor market and savings from low gas prices. The outlook for the industry remains positive in view of the upcoming holiday season when people tend to spend more on eating out and entertainment.
Dallas based Dave & Buster's Entertainment ( PLAY ) operates an arcade and restaurant chain that combines entertainment and dining in one location. The company was founded in 1982, when two friends Dave and Buster, who respectively ran a bar and an arcade side by side in Little Rock, Ark., decided to combine the businesses. They IPOed in October last year with an offer price of $16 a share.
The chain targets adults aged between 21 and 39, with average household income of approximately $80,000. They aim to provide their guests the experience of "Eat, Drink, Play, Watch" all in one location.
In addition to providing strong sports viewing package and promotions, they also aim to provide compelling venues for corporate and social special event parties.
Solid Second Quarter Results and Improved Guidance
Total revenues for the quarter increased 19.8% year-over-year to $217.3 million. Amusement and other sales grew 22.4% while food and beverage revenues increased 16.8%.
Comparable store sales rose 11% compared to a 5.7% increase in the same quarter last year. Earnings of $0.40 per share were significantly ahead of the Zacks Consensus Estimate of $0.23 per share. The company has beaten Zacks Consensus Estimates in all of last four quarters, with an average quarterly surprise of 33.7%
Gold miners have had a rough ride in the recent past thanks to the decline in gold prices . In fact, gold miners have been more hit by the precious metal's slide as they are considered a leveraged play on the metal.
About the Company
Randgold Resources ( GOLD ) is an African focused gold mining and exploration company, with its stock listed on London Stock Exchange and NASDAQ. The company operates 5 gold mines in 3 African countries.
Second Quarter Results
The company reported decent operating performance in the face of declining metal price. Group production rose 7% quarter-over-quarter, while overall total cash costs improved by 3%. Profit was up 15% over the prior quarter.
EPS of $0.57 was ahead of the Zacks Consensus Estimate of $0.53 by about 7.5%. However, the company had missed the Zacks Consensus Estimates in the prior three quarters, with an average negative quarterly surprise of 13.4%.
Analysts have slashed their estimates for the company in view of the weak outlook. Zacks Consensus Estimates for 2015 and 2016 are now $1.97 per share and $2.18 per share respectively, down sharply from $2.43 and $3.26, before the results. These estimates translate into a projected year over year earnings decline of 21.4% for 2015.
3 Reasons Why McDonalds' Breakfast All Day Is a Terrible Idea
Starting today, you can now get your favorite McDonald's ( MCD ) breakfast items all day, as the company abolishes its dreaded 10:30am cut-off. That means McMuffins for lunch, and pancakes for dinner if you are so inclined.
Many are praising the decision as a great move for the struggling fast food giant as pretty much everyone can agree that McDonald's breakfast is tasty, and in general who doesn't like breakfast foods anyway? Plus, breakfast accounts for roughly a quarter of MCD's sales already and it has been a bright spot for a company that is seeing sagging revenues and intense competition.
But while many might think this is a great idea, I am not a fan of this expansion. I think this further distracts the company from its main business-the one that generates 75% of sales-of burgers, fries, and the like, and that while it might cause a temporary boost, eventually the glow from an afternoon egg sandwich will fade. If anything, I think this is going to cause more problems than it solves and McDonald's will probably regret it for the following three reasons:
Lower price point
While having breakfast at all hours might draw in some new people, many of the late breakfast eaters will probably be those who were going to eat at McDonald's anyway. And if it is, McDonald's could see a hit to the top line as many breakfast value meals are far cheaper than what we see for lunch or dinner.
According to Secretmenus.com , we see prices of $4.19 (bacon, egg, & cheese biscuit) and $3.39 (Big Breakfast) McDonald's breakfast value meals while a double quarter pounder with cheese value meal is $5.39 on average and a Big Mac meal is $5.69. While the breakfast may be more profitable, getting more consumers to these lower price points are likely to do nothing for McDonald's main problem which is flat-lining sales.
It also seems very much opposed to McDonald's latest initiatives in the chicken market as the company looks to expand its premium offerings there. The latest is the Premium Buttermilk Crispy Chicken which costs $4.59 for the sandwich alone , so why wouldn't you push more people towards that instead of the cheaper biscuits and hot cakes?
Longer wait times/Too Many Choices
McDonald's franchisees have long complained about the bloated menu and that there are just way too many items right now. At the start of the year, MCD had over 100 menu items which is huge growth from its nine item menu back in 1948. And while the new team at McDonald's has managed to trim some of the fat in preparation for the launch of all-day breakfast, the fact remains that McDonald's is experiencing some of its slowest drive through and wait times ever.
And contrast that to some of the upstarts in the fast food world. Chipotle ( CMG ) basically has a handful of menu choices and same with Chick-fil-A. Even relative newcomer Shake Shack ( SHAK ) has a slimmed down menu (and remains true to its burger and shake heritage) while McDonald's is seemingly adding more choices all the time.
Given this, does it really make sense to offer even more items throughout the day? Franchisees have already had to pony up for more equipment and there seems to be little guarantee that this will not move the needle even more in the wrong direction when it comes to already historic wait times.
You want what you can't have
What you may not have seen in the McDonald's commercials is that it won't be a complete breakfast offering. There will be no hash browns at some restaurants (though the vast majority will have hash browns), and either biscuits or Egg McMuffins depending on your location (but not both). In other words, many are going to be disappointed already by the McDonald's breakfast all-day program.
And I think part of the appeal of the McDonald's breakfast is that you have to go early in the day and that it is for just a limited time. Once you can get breakfast sandwiches all hours of the day I think the McDonald's breakfast will lose its luster. Why bother waking up for breakfast anymore when you can get some of your favorites at 3pm?
Sure, breakfast at McDonald's all day might seem like a good idea and we might see an uptick in sales as a result. It could even get some more people in the door and particularly on the weekends in that late-brunch period.
However, I question whether this will be worth the extra wait times and if losing the exclusivity of the breakfast hours will hurt the McDonald's breakfast brand in the long run. Plus, without some key items, many consumers are likely to be disappointed or unlikely to partake in the expanded program anyway.
So let's see if this all-day breakfast is more than just a passing fad or a step in the right direction for the company. Perhaps some people will change their habits because of this, but I can't see it being the silver bullet that McDonald's needs right now.
But let's face it, we have all just barely missed the McDonald's breakfast and been disappointed by this at least once in our lives. But once you missed the cut-off have you ever jumped back into your car and didn't bother to get McDonald's altogether when that happened? I know I haven't, and I have a hard time believing anything will change now, except that I will probably be disappointed that only some breakfast items are available leading me once again to order that lunch value meal same as always, though I'll probably have to wait a bit longer now.
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