Market Overview

Wunderlich: Better Macro Trends Supports 2015 Restaurant Outlook


Robert Derrington of Wunderlich Securities commented in a note on Wednesday that restaurant industry sales trends are poised for some of the strongest monthly gains in recent memory which bodes well for the group's 2015 outlook.

According to Derrington, an improving U.S. macro backdrop along with improving consumer confidence, sentiment and employment trends along with declining gasoline prices will boost restaurant sales in the coming year. The analyst notes that major restaurant same-store sales industry indices reported positive same-store sales for the fifth consecutive month –- the first time this has occurred since early 2012.

"While some same-store sales volatility is likely to remain, our supportive Industry outlook is not blind to the risk of creeping labor costs from higher minimum wage rates, health care costs, and employee turnover,” Derrington wrote. “Despite that risk, we believe the combination of improving sales and lower food inflation (from record crop harvests and favorable grain prices, yielding an improving outlook for protein/dairy prices in 2015) has the industry positioned, in our view, for better sales, lower costs, and steady stock price appreciation.”

Derrington's top picks include Buffalo Wild Wings (NASDAQ: BWLD) BJs Restaurants (NASDAQ: BJRI), Jack in the Box (NASDAQ: JACK) and Red Robin (NASDAQ: RRGB).

Latest Ratings for JACK

Nov 2020Morgan StanleyMaintainsEqual-Weight
Nov 2020Credit SuisseMaintainsUnderperform
Nov 2020WedbushMaintainsOutperform

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Posted-In: Food Inflation restaurants Robert Derrington Wunderlich SecuritiesAnalyst Color Restaurants Analyst Ratings General

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