Notable news items and price action over the past twenty-four hours.
- CMG reported strong results for 4Q with comps coming in at 12.6% versus the street at 10.3% and EPS at $1.47 for the quarter versus expectations of $1.30. Margin volatility and little pricing power means that I have a bearish view on CMG. The sell-side is cutting ratings this morning, but I see $6.00 in earnings in 2011 and I think 25x is a fair multiple. See my note from this morning. The stock traded up after hours but has come back down.
- CAKE reported EPS at $0.36 for the fourth quarter versus expectations at $0.35. This beat was largely due to a favorable tax rate and the outlook is highly uncertain given the company’s un-hedged exposure to dairy, cheese, and fresh fish. EPS guidance was reiterated but food costs have risen by $0.05 since initial guidance. See my post from earlier this morning for more details.
- PNRA reported earnings at $1.21 versus the Street at $1.18 and raised its 2011 EPS forecast to $4.40-$4.45 versus the Street at $4.35. The company sees 1Q EPS at $1.06-$1.08 versus consensus at $0.99. This morning, price targets and ratings are being revised upward.
- BJRI reported earnings in line with expectations.
- KONA reported earnings for 4Q after the close. Same-store sales came in at 6.4% and the company reported a loss-per-share of $0.05. The company guided to a loss of -$0.04 to -$0.10 per share for 1Q11.
- CPKI also reported earnings, printing revenue numbers in line with the Street and beating on the bottom line with EPS at $0.17 versus the $0.10 Street estimate. Guidance for 1Q was given at $0.03-$0.05 versus the Street at $0.11.
- In terms of price action, another low-volume day for restaurant stocks. DIN and KONA gained on strong volume.
- BWLD and CHUX declined on strong volume, as did CAKE.
- JACK, SBUX, and YUM traded well on a relative basis, both gaining 50 basis points on good volume.
- On its earnings call for 4Q earnings, Kraft said that earnings will fall at least $0.04 if the company loses Starbucks’ business.
Howard Penney
Managing Director
