Stephens' Cheat Sheet For Restaurant Sector's Earnings

Earnings season for the restaurant sector is kicking into high gear with eight companies reporting soon, analysts at Stephens commented in a research report. As a whole, volatility and negative sentiment hasn't changed much there may be a few positive standouts in the quarter.

McDonald's (Reporting Tuesday)

• McDonald's Corporation MCD's Q2 should show continued acceleration in U.S. same-store sales and grow 3.5 percent.
• Global results are also expected to show signs of acceleration.
• McDonald's should earn $1.58 per share on revenue of $5.9039 billion which is below the Street's estimates of $1.62 per share and $5.9642 billion.
• Shares are Overweight rated with a $155 price target.

Chipotle Mexican Grill (Reporting Tuesday)

• Expectations for a recovery in Chipotle Mexican Grill, Inc. CMG 2Q report is "unwarranted" following a new food safety scare.
• Concerns over average unit volume in new units remain along with expectations for margin progression.
• For Q2, the company should post a same-store sales growth of 8.5 percent and earn $2.14 per share.
• However, the brand's long-term concept remains "attractive" and a bullish stance may be justified but at better valuations and a reset of investor expectations.
• Shares are Underweight rated with a $350 price target.

Domino's Pizza (Reporting Tuesday)

• Domino's Pizza, Inc. DPZ's second quarter should mark the end of a three-quarter long streak of double-digit U.S. same-store sales growth.
• Nevertheless, same-store sales are expected to grow 7.6 percent on "strong incremental sales" and "impressive traffic growth."
• However, at approximately 21x FY2018 EBITDA, the stock already prices in expectations for "impressive" growth.
• Shares are Equal-Weight rated with a $185 price target.

Buffalo Wild Wings (Reporting Wednesday)

• Heading into Buffalo Wild Wings BWLD Q2, investors have "more questions than answers" and left with a "feeling of now what."
• Uncertainty around the management transition remains a concern in the near term.
• The longer-term story is also "attractive" but investors should remain on the sidelines pending further clarity into trends.
• Same-store sales for Q2 are expected to fall 2.0 percent and the company should earn $0.94 per share.
• Shares are Equal-Weight rated with a $145 price target.

Bojangles (Reporting Thursday)

• Top-line softness from the first quarter should have carried over into the second quarter for Bojangles Inc BOJA.
• However, the company's woes are likely temporary and a more active promotional calendar will yield positive results.
• The company also has an impressive streak of beating EPS estimates in every quarter since its IPO debut.
• Same-store sales are expected to have declined 3.0 percent in Q2.

Starbucks (Reporting Thursday)

• Starbucks Corporation SBUX's fiscal third-quarter print should show an acceleration in same-store sales.
• Same-store sales also ease in the third (modeled at +5.0 percent) and fourth quarter which provides "some top-line tailwinds."
• However, uncertainties around top-line sustainability remain along with margin pressures.
• Shares are Equal-Weight rated with a $58 price target.

Dunkin Donuts (Reporting Thursday)

• Cold Brew, espresso-based drinks and breakfast sandwiches likely helped Dunkin Brands Group Inc DNKN in the quarter.
• But the company also suffered from challenging weather in key regions and the ongoing competitive landscape, especially from McDonald's $1 and $2 beverage sales.
• The Dunkin Donuts chain should show a same-store sales growth of 0.5 percent and the entire company should earn $0.64 per share in the quarter.
• Soft traffic trends and a lack of clear catalysts should keep investors on the sidelines for now.
• Shares are Equal-Weight rated with a $54 price target.

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