THE HBM: GMCR, CMG, WEN, AFCE, RRGB

THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Initial jobless claims came in at 390k versus consensus 400k and an upwardly revised 400k the week prior.  Rolling claims increased to 400k from 403.5k the week prior.

THE HBM: GMCR, CMG, WEN, AFCE, RRGB - initial claims 1110

 

SUBSECTOR PERFORMANCE

THE HBM: GMCR, CMG, WEN, AFCE, RRGB - subsector fbr

QUICK SERVICE

GMCR: The top line was always going to be the straw to break the back of this one.  Predicting when it was going to be revealed was obviously the key.  Missing earnings and top-line expectations was certainly a negative point but the capex guidance was a major concern for us; the capital intensity of the business should be decreasing as the company grows.  What we have been observing is that the company’s ability to generate cash is less and less believable.  We would also note that the miss should have been bigger; the tax rate was highly favorable 4QFY11.

CMG: Chipotle Mexican Grill was upgraded to Hold at Miller Tabek.

WEN: Wendy’s reported EPS of $0.05 ex-items versus expectations of $0.04 but comps were slightly disappointing. As we wrote yesterday, the company has longer term issues to resolve but we are positive on the TAIL (three years or less) duration.

WEN: Wendy’s was downgraded to Hold from Buy at Deutsche Bank. 

AFCE: AFC Enterprises reported 3Q EPS of $0.25 vs consensus $0.23.  Domestic comps increased +1.7%.

CASUAL DINING

RRGB: Red Robin Gourmet Burgers introduced a new burger to their holiday promo line-up, the Sweet Jim Beam Bacon Swiss Burger.  The burger is available through December 24th.

THE HBM: GMCR, CMG, WEN, AFCE, RRGB - stocks 1110

Howard Penney

Managing Director

Rory Green

Analyst