TALES OF THE TAPE: CMG, MCD, KONA, MSSR, BOBE

Notable news items and price action from the restaurant space as well as our fundamental view on select names.

 

 

MACRO

 

Corn futures climbed in Chicago as speculation grew that hot weather in parts of the U.S. will curb supplies.  The U.S. is the world’s largest producer and exporter of corn.

 

European coffee stockpiles climbed 11% to 12.7 million bags on May 31 from 11.46 million bags on April 30, according to the European Coffee Federation.  Coffee prices have been in a downward trajectory during July, but remain up 52% year-over-year.

 

TALES OF THE TAPE: CMG, MCD, KONA, MSSR, BOBE - coffee 719

 

 

Food processors continue to underperform as their costs remain high.  Looking at commodity prices over the past week, there seems to be ample volatility across the board and we would expect that to continue to pressure the food processors.

 

TALES OF THE TAPE: CMG, MCD, KONA, MSSR, BOBE - subsector fbr

 

 

QUICK SERVICE

  • CMG is reporting after the close.  Consensus comps are +8.6%, consensus EPS is $1.68, and revenue is $558.3M.  Goldman is advising buying an August $330 straddle ahead of a possible EPS miss.
  • MCD June U.S. comp sales estimate was increased to 7.3% at Janney.

 

CASUAL DINING

  • KONA continues to blaze a trail higher, gaining 3.7% on accelerating volume.  It is, by far, the best performing stock on one week, thirty day, and ninety day durations.
  • MSSR and BOBE both gained on accelerating volume.

TALES OF THE TAPE: CMG, MCD, KONA, MSSR, BOBE - stocks 719

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst