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Fogo de Chao (FOGO) Q4 Earnings to Gain From Higher Sales

Fogo de Chao, Inc.FOGO is scheduled to report fourth-quarter 2017 results on Mar 6, after market close. The to-be-reported quarter will mark the leading Brazilian steakhouse's 11th quarterly earnings release since it began trading on Nasdaq in June 2015.

Despite a stringent sales environment in the U.S. restaurant space, Fogo de Chao's sales building initiatives are likely to reflect positively in the to-be-reported quarter's revenues and earnings.

Shares of the company have rallied 15.3% in the past year, outperforming the industry 's gain of 9.9%.

Sales-Building Efforts to Aid Both Top and Bottom Line

The consensus estimate for Fogo de Chao's fourth-quarter revenues is pegged at $86.7 million, suggesting 7.2% year-over-year growth. The company's commitment to drive sales through price optionality and value offerings to customers is continuously aiding the topline.

The company's other sales-building initiatives include continuous menu innovation, provision of both value and differentiated guest experience, and unit openings.

Even though the company's margins have been under pressure for quite some time, these sales driving efforts are expected to aid the bottom line in the to-be-reported quarter as well. However, higher costs related to restaurant operations and sales building might partly offset earnings growth in the fourth quarter. Subsequently, the Zacks Consensus Estimate for earnings in the quarter is pegged at 29 cents, mirroring 3.6% year-over-year growth.

Recent Acquisition Agreement to Favor Long-term Growth

Recently, the company announced that it will get acquired by investment entities affiliated with Rhone Capital. Under the merger agreement, Rhone will buy Fogo de Chao in an all-cash transaction valued at $560 million. Shareholders will receive $15.75 per share on closing of the deal in the second quarter of 2018. Management believes that the merger will help the restaurant achieve highest value for its stockholders and enrich the brand.

Our Quantitative Model Predicts a Beat

Fogo de Chao has the right combination of two key ingredients - a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher - for increasing the odds of an earnings beat.

Zacks ESP: The company has an Earnings ESP of +6.90%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: The restaurant has a Zacks Rank #3.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Fogo de Chao, Inc. Price and EPS Surprise

Fogo de Chao, Inc. Price and EPS Surprise | Fogo de Chao, Inc. Quote

Other Stocks to Consider

Here are a few other restaurant stocks, which according to our model possess the right combination of elements to post an earnings beat.

Chuy's Holdings CHUY has an Earnings ESP of +1.94% and a Zacks Rank #2 (Buy). The company is expected to report quarterly numbers on Mar 8, 2018. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

BJ's Restaurants BJRI has an Earnings ESP of +1.53% and a Zacks Rank #2. The company is anticipated to report quarterly figures on Apr 26, 2018.

Cheesecake Factory CAKE has an Earnings ESP of +0.23% and a Zacks Rank #3. The company is expected to report quarterly numbers on May 2, 2018.

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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.


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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