Wedbush Previews 'Nothing Straightforward' About Q2 For Restaurants

  • Wedbush analysts Nick Setyan, Paul Hao, and Michael Symington said they expect Texas Roadhouse Inc TXRH (Outperform, $100 price target) to report in-line-to-above same-store sales growth for Q2.
  • Analysts also expect TXRH's 2H SSS growth expectations to remain largely intact.
  • Analysts view TXRH as the only company-owned restaurant within the publicly traded restaurants universe of having any chance of meeting their cons. Q2 UL margin estimate. 
  • They added that steak costs might turn into a relative medium- to longer-term headwind from a near-term tailwind, but that scenario will be much more manageable.
  • The analysts expect Domino's Pizza Inc DPZ (Outperform, $430 price target) management to communicate a revamped strategy around menu innovation and 3PD.
  • Domino's Q2 same-store sales growth and margin headwinds are likely to be reflected in expectations.
  • Analysts believe Wingstop Inc WING (Outperform, $105 price target) is relatively well-positioned in both recessionary and expansionary environments due to its historical outperformance, relative value positioning, and the uptick in the national ad fund to 5% from 4% this year.
  • They expect WING's management to communicate the timing of Uber Technologies, Inc. UBER UberEats partnership and the system-wide rollout of the chicken sandwich.
  • Cheesecake Factory Inc CAKE (Outperform, $38 price target) is likely to have its Q2 margins under pressure. The analysts expect an incremental price increase in mid-Q3 to be taken to offset continued food cost inflation.
  • The analysts noted BJ's Restaurants Inc's BJRI (Neutral rating, $24 price target) top line recovery had trailed peers during the recent past. They expect BJRI's SSS growth recovery to power top-line results in 2H in-line, or even ahead of, current expectations.
  • Analysts expect Chipotle Mexican Grill, Inc.  CMG (Outperform, $1,800 price target) to report Q2 SSS growth in the low-double-digit range, in line with guidance of 10-12% and 11.2% cons.
  • Analysts expect McDonald's Corp MCD (Outperform, $270 price target) U.S. SSS growth largely in line with cons. of 2.9%. 
  • Price Action: TXRH shares traded higher by 2.60% at $82.42 on the last check Tuesday.
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Posted In: Analyst ColorNewsPrice TargetReiterationRestaurantsSmall CapAnalyst RatingsGeneralBriefsConsumer DiscretionaryRestaurants