THE HBM: SBUX, SAFM, TXRH, BWLD AND FSR EPS REVISIONS

THE HEDGEYE BREAKFAST MENU

 

Notable macro data points, news items, and price action pertaining to the restaurant space.

 

MACRO

 

International beef trade continues to be a big factor in this year's record cattle prices. During the first half of 2011, 10.3% of U.S. beef production was exported and imports equaled 8.1% of production. U.S. beef exports during June were up 19.6% while beef imports were down 16.7% compared to a year ago. The biggest foreign buyer of U.S. beef in June was Japan.

 

SUB-SECTOR PERFORMANCE

 

The Food Processors significantly underperformed last Friday as corn prices continued to rally.

 

This weekend’s Barron’s argues SAFM looks overpriced as it notes that high corn and soybean prices, low chicken prices, low chicken demand as well as an upcoming slack season could mean 25% downside. 

 

THE HBM: SBUX, SAFM, TXRH, BWLD AND FSR EPS REVISIONS - hfbrd

 

QUICK SERVICE

 

  • Coffee stocks (ex SBUX) underperformed the group, but on low volume.
  • Last week QSR stocks underperformed the S&P 500 last week by 180bps

 

FULL SERVICE

  • TXRH outperformed as it announced a $50M increase in stock repurchase authorization
  • BWLD outperformed on positive comments from a broker
  • DRI - Olive Garden has rolled out its annual Never Ending Pasta Bowl limited-time offer for $8.95 this week.
  • Last week FSR stocks underperformed the S&P 500 by 240bps
  • Casual dining sales trends, as indicated by Malcolm Knapp’s Knapp-Track Casual Dining Sales Index, sequentially accelerated on a two-year average basis in July.  The better top line trends are not enough to offset the significant increase in commodity prices.  As a result EPS estimates are under continued pressure.

THE HBM: SBUX, SAFM, TXRH, BWLD AND FSR EPS REVISIONS - fsreps

 

 

THE HBM: SBUX, SAFM, TXRH, BWLD AND FSR EPS REVISIONS - qsr

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Howard Penney

Managing Director

          

 

Rory Green

Analyst


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