Think Chuy's Will Beat The Market? These Analysts Agree

• The share price of Chuy's Holdings, Inc. CHUY has increased by almost 57 percent, year to date, reaching a high of $34.41 on August 6.
• Wedbush’s Nick Setyan has upgraded the rating on the company from Neutral to Outperform, while raising the price target from $31 to $38.
• While near term same store sales growth appears to be accelerating and new unit performance has improved, Setyan expects Chuy Holdings to see 20 percent annual EPS growth in the longer term.

According to the Wedbush report, “Evidence of improving new unit performance and acceleration in the maturation cycles of previously underperforming units renders upside to 2015 and 2016 expectations likely.”

Analyst Nick Setyan also mentioned that recent checks suggest that same store sales growth was likely to come in ahead of the consensus forecasts for Q3, with acceleration in the new unit maturation cycles leading to comp acceleration.

“Our checks of new units largely indicate better new store volumes for the class of 2014 and 2015 openings compared to 2013 openings and vs. our previous checks,’ Setyan stated.

Setyan also mentioned that the gap between same store sales growth and year on year AWS growth has been improving in the recent quarters, which indicates “improved non-comp and new unit opening volumes.”

In addition, Setyan expressed optimism regarding the company’s ongoing focus on cost control and the persisting food cost tailwind.

“With the mix of non-comp units set to decline in addition to a more pronounced maturation curve,” Setyan believes that the company has enough annual operating leverage to achieve annual EPS growth of over 20 percent beyond 2016.

The EPS estimates for 2015 and 2016 have been raised.