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