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    MARKET EDGES

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Notable news items and price action from the past twenty-fours along with our fundamental view on select names.

  • DPZ gained 10% yesterday on accelerating volume after posting better-than-expected earnings. 
  • TXRH gained 5.3% on accelerating volume.  I have a negative fundamental view of this stock and, over the past few months, the stock has underperformed many of its peers.
  • CAKE also gained on accelerating volume and my view of this stock is also negative.  This company is one that I believe is guiding below where inflation will ultimately be for their commodity basket this year.
  • CPKI reported earnings last night; EPS came in at $0.09 versus consensus of $0.06 but comparable restaurant sales came in at -2.1% versus consensus -1.4%.  2Q guidance is for EPS $0.20-0.21 and comparable restaurant sales flat-to-positive 1%.  Inflation guidance was raised from 2.5% for FY11 to 3% (which I still think is low).
  • GMCR announced the pricing of its common stock offering of an aggregate of 8,189,544 shares of its common stock at a price to the public of $71/share.
  • BWLD gained on accelerating volume. 
  • BAGL gained on accelerating volume and the company posted weaker-than-expected earnings after the close last night.
  • CBOU gained on accelerating volume and posted earnings above consensus with the benefit of a one-time tax benefit.
  • SBUX is hosting a half-price Frappuccino happy hour today.  Frappuccino Happy Hour will be held daily through Sunday, May 15.
  • SBUX featured in the “Heard on the Street” column in the Wall Street Journal yesterday.  The column detailed that SBUX is trading at 25x FY11 EPS and may be rich with coffee prices more than doubling in the last year. 

TALES OF THE TAPE: DPZ, TXRH, CAKE, CPKI, GMCR, BWLD, BAGL, CBOU, SBUX - stocks5.6

Howard Penney

Managing Director