Is Now A Good Time To Buy Restaurant Stocks?
As most of the world has returned to normalcy following the pandemic, restaurant stocks could be worth noting in the stock market. Two years ago, when the pandemic struck the world, dining restrictions were placed and restaurants were forced to pivot to pick up and delivery, with some restaurants succeeding and others failing to adapt. Today, we see those restrictions largely being lifted and consumers are dining in once again. As such, investors are likely keen on seeing how the return to dine-ins would reflect on paper amid this earnings season.
One restaurant stock investors may be considering would be Brinker International (NYSE: EAT). The parent company of Chili’s saw increased comparable sales across all its brands, with sales at Maggiano’s rising 50.5%. “Despite these near-term obstacles, we are well-positioned to increase our investment in both Chili’s and Maggiano’s, significantly expanding our restaurant development while leaning further into technology to improve our performance and guest experience,” said Wyman Roberts, the CEO of Brinker. Elsewhere, Dave & Buster’s (NASDAQ: PLAY) recently announced that it will be acquiring Main Event, a family entertainment company. Such a move would merge two thriving brands with a uniquely different target demographic. Overall, given these developments, here are four restaurant stocks to watch in the stock market today.
Restaurant Stocks To Buy [Or Avoid] Right Now
- Restaurant Brands International Inc. (NYSE: QSR)
- Starbucks Corporation (NASDAQ: SBUX)
- Chipotle Mexican Grill Inc. (NYSE: CMG)
- McDonald’s Corporation (NYSE: MCD)
Restaurant Brands International
Kicking off our list today is Restaurant Brands International (QSR). The Canadian company’s portfolio includes the likes of several major names in the fast-food industry. Specifically, it includes Burger King, Popeyes, and Tim Horton to name a few. According to QSR, the company facilitates approximately $31 billion in system-wide sales annually. QSR is able to do so through its impressive network of over 27,000 restaurants operating across more than 100 countries. On Tuesday, QSR reported its first-quarter 2022 results that beat Wall Street expectations.
For starters, revenue came in at $1.45 billion in the past quarter, beating estimates of $1.41 billion and rising by 15.2% year-over-year. The company owes the solid revenue to Burger King. Notably, the burger chain’s international same-store sales soared 20.1% in the past quarter. Earnings came in at $0.64 per share on an adjusted basis, exceeding the $0.63 estimate by just a hair. Besides that, this also marks the first full quarter that QSR included its recently acquired Firehouse Subs in its revenue. The sandwich chain saw same-store sales growth of 4.2% during the quarter. Considering all this, should you invest in QSR stock?
Next, is Starbucks, a company that only needs little introduction, seeing that it is the largest coffeehouse chain in the world. The coffeehouse on average serves about 4 billion cups of coffee a year globally. Through its global network of more than 34,000 stores, the company serves high-quality arabica coffee to its customers. Earlier this week, the coffeehouse chain reported its fiscal second-quarter revenue that exceeded consensus estimates.
Diving in, net sales grew by 14.5% to $7.64 billion, surpassing expectations of $7.6 billion. In the previous quarter, Starbucks saw its global same-store sales rise by 7%, largely thanks to strong growth in the U.S. Specifically, same-store sales in the U.S. climbed 12% thanks to higher spending per order and more frequent visits. Starbucks’ loyalty program sees commendable gains as well, with active memberships jumping 17% to 26.7 million customers. Moving on, the company saw a net income of $674.5 million, an increase of about 2% year-over-year. As such, adjusted earnings per share were $0.59, which was in line with analyst forecasts. With that being said, should you keep tabs on SBUX stock?
Another notable restaurant stock is Chipotle. As it stands, Chipotle is one of the largest restaurant companies in the world. The Mexican fast-casual restaurant mainly offers a menu of burritos, tacos, and salads. For a sense of scale, it operates more than 2,500 restaurants worldwide, most of which are based in the U.S. Besides that, the company also has a staff of more than 60,000 people. Last week, Chipotle reported first-quarter earnings and revenue that were above analyst estimates.
The company reported a total revenue of $2.02 billion for the quarter, inching above estimates of $2.01 billion. Compared on a year-over-year basis, revenue climbed by 16% thanks to the company’s pricing power. Chipotle’s same-store sales also rose by 9% during the quarter. Besides, the company saw a net income of $158.3 million, up from $127.1 million the year before. Accordingly, adjusted earnings per share were $5.70, beating expectations of $5.64 per share. Looking ahead, the company expects same-store sales to grow by 10% to 12% during the second quarter. And on that note, is CMG stock a buy?
Closing off our list today is McDonald’s. Being one of the largest fast-food chains in the world, McDonald’s is likely a stranger to no one. With over 39,000 locations in over 100 countries, the company serves over 60 million customers daily. Its product offerings include a wide variety of burgers, chicken products, breakfast items, and desserts. Despite the broad market volatility, MCD stock has managed to eke out a gain of 6% over the past year. On April 28, McDonald’s reported its first-quarter financials which topped expectations.
Cutting to the chase, the company brought in $5.67 billion in revenue, exceeding forecasts of $5.59 billion and rising 11% compared to the same quarter in 2021. Besides that, McDonald’s saw its global same-store sales grow by 11.8%, with its international markets reporting an impressive same-store sales growth of 20.4%. On top of that, McDonald’s achieved digital systemwide sales that exceeded $5 billion during the quarter. This represents over 30% of the total systemwide sales in the company’s top six markets. As for its profits, the company raked in a net income of $1.1 billion. Earnings per share for the quarter were $2.28 on an adjusted basis, topping expectations of $2.17 per share. With this quarter’s results in mind, is MCD stock worth watching?