Notable news items and price action from the past twenty-four hours as well as our fundamental view on select names.

  • SONC gained 4% on accelerating volume after reporting an acceleration in system-wide comps for the first two months of the company’s third fiscal quarter ending May 31st.  The company cited hotdogs as a major driver of sales for the company in the quarter. 
  • DIN reported 1Q11 EPS of $1.46 versus $1.16 consensus this morning.  Applebee’s domestic system-wide same-restaurants sales increased +3.9% versus consensus of 2.1%.
  • TXRH reported 1Q11 EPS of $0.27 versus $0.29 consensus.  Company-owned same-restaurant sales came in at +4.6% versus consensus at +3.7% but operating margin was 10.6% versus consensus 11.4%.  Inflation is proving a problem for the steak chain.  The company guided to EPS growth of 5-10% versus prior 10%, implying $0.84-$0.88 versus prior $0.88 and consensus of $0.90.  Sales accelerated in the early stages of 2Q, according to management.
  • MSSR reported 1Q11 earnings yesterday.  EPS came in at -$0.04 versus expectations of $0.00.  Comparable restaurant sales decreased 3.2%.  The company reaffirmed its prior earnings forecast of annual 2011 fully diluted earnings per share to be between $0.35 and $0.40 excluding the remodeling project.
  • KKD was initiated neutral at Janney.
  • CBRL declined yesterday on strong volume.  I continue to believe that CBRL will be a net market share loser in the current environment.
  • PNRA is breaking down finally on strong volume.  The trade line of resistance, according to the Hedgeye Quantitative setup, is $123.33.
  • JACK continues to show signs of weakness.
  • DPZ Is telling U.S. regulators a health-law mandate requiring chain restaurants to post calorie contents of fare is unworkable because the company offers 34 million combinations of toppings, crusts and sauces.



Howard Penney

Managing Director

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In the past six months, U.S. stock indices are up between +12% and +18%.

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We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

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Cartoon of the Day: Acrophobia

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UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

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Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

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Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

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An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

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Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

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