THE HEDGEYE BREAKFAST MENU
CALLOUT OF THE DAY
The DNKN visual below, (from http://www.dunkinfranchising.com) promoting Dunkin’ Donuts franchising opportunities, is a great visual that shows how truly regional the Dunkin brand is.
MACRO
Employment
The U.S. Monster Employment Index fell 2 points in July to 144. The fall in labor demand is in line with other surveys which suggest the U.S. labor market failed to improve markedly in July. A stronger U.S. recovery hinges on an improving labor market.
Consumer
According to the Bloomberg Weekly Consumer Comfort Index, sentiment fell from -46.8 to -47.6 for the week ending July 31st. The index has declined for two consecutive weeks and is at its lowest since May.
Subsectors
Yesterday was a bloodbath in the market – no subsector was “safe” – but food retail outperformed the other food, beverage and restaurants categories. Food processors traded down -6.2%, underperforming the other categories. The decline in the food processing stock was somewhat surprising given the significant decline in commodity costs.
PRICE ACTION
Consistent with the broader market, a number of stocks in the restaurant space fell on accelerating volume. The names that stand out that did not see accelerating volume are also some of the strongest fundamentally (valuation aside). In the QSR space: MCD, CMG, SONC, KKD, BAGL and GMCR. In the casual dining space: KONA, RRGB, DRI, RT, MSSR.
QUICK SERVICE
- BAGL reported Q2 EPS of $0.18 versus consensus $0.21; SSS 0.2% versus year-ago 0.8%
- SBUX Japan reported in line numbers for the period ended June 30.
- WEN will do business as “The Wendy’s Company” effective Tuesday and continue to trade under the ticker “WEN” following the completion of the sale of Arby’s Restaurant Group to Roark Capital.
FULL SERVICE
- RRGB initiated outperform at BMO Capital
- CEC reported Q2 EPS $0.34 versus consensus $0.32; SSS sales were up 0.8% during H1 of 2011 and were down 7.9% during the first four weeks of Q3 of 2011. Guidance EPS $2.75-2.95 versus prior guidance $3.00-$3.10
- MSSR reported Q2 EPS $0.09 ex-items versus $0.09 Comparable restaurant sales -2.7% versus consensus of -2.5%; Guidance (Dec 2011): EPS $0.26-0.31 versus prior guidance $0.31-0.36.
Howard Penney
Managing Director
Rory Green
Analyst
