CRI Black Book: Dial-In and Materials

Takeaway: Hedgeye conference call to discuss $CRI black Book starts in t-minus 30.

Valued Client,

Please dial in 5-10 minutes prior to the 1:30pm EST start time using the number and code provided below:

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 225359#  


To access the presentation please follow the link below:

CRI Black Book



Hedgeye Black Books are deep dive research projects, exposing all details of a company, examining past present and future, they are a tool to be saved. This presentation will discuss how the current macro environment and company specific data points are influencing CRI and the best way to play this stock moving forward. 

Topics of discussion will include:

  1. Product Differentiation: CRI is at a point where it is selling like product in very dissimilar channels. How much longer can it go before there is an impact to the P&L?
  2. The company is going from harvesting mode to investing mode. What are the margin and growth implications?
  3. A detailed look at demographics, and how shifting growth rate in different parts of the birth rate curve should impact CRI.
  4. The evolution of the competitive landscape - both at retail and wholesale. How closely is it tracking the change in demand?
  5. Ultimately, what do you do with the stock here?  


If you have any questions please contact .

MACAU: Accelerating Growth

Now that China’s Golden Week holiday has come and gone, it makes sense that gaming table revenues have dropped off in Macau. Still, revenues are above normal, up +20% year-over-year. Our Gaming, Leisure and Lodging team expects 3-9% gross gaming revenue growth for the full month of October; comps will be difficult as well considering that revenue was up +42% in October 2011 over October 2010. 


MACAU: Accelerating Growth - gg normal

Betting On Banks

Financials have been one of the best performing sectors in the S&P 500 this year. Looking specifically at the big banks out there, one can see that many of them have done quite well with some exceeding expectations and one name in particular that’s struggling to catch up to their peers.


The Financials SPDR ETF (XLF) is up +22.2% year-to-date and while that's an excellent return by any investor's standards, buying individual names pays off in the long run with the likes of Bank of America (BAC) and Goldman Sachs (GS) up +66.4% and +55.5%, respectively. The biggest loser of the bunch is Morgan Stanley (MS), whose +15.4% year-to-date performance doesn’t hold a candle the broader market or other banks.


Betting On Banks - BANKSchart

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Takeaway: Casual Dining same-restaurant sales data for September was not positive for stocks in that category. We are bearish on $TXRH and $BLMN

Casual Dining trends do not seem to be supportive of consensus expectations; we are bearish on the casual dining space and see Texas Roadhouse (TXRH) and Bloomin’ Brands (BLMN) as the best opportunities on the short side.


Knapp Track


According to Malcolm Knapp, estimated Casual Dining comparable restaurant sales growth for September 2012 was -0.8%.  The sequential change, in terms of the two-year average trend, was -5 bps.  This implies 3Q comps of 0.4% for casual dining.


Guest counts declined -2.5% versus September 2011.  The sequential change, in terms of the two-year average trend, was flat.  This implies 3Q traffic of -1.8% for casual dining.  





We continue to believe that consensus is far too bullish on casual dining top-line trends.  Anemic real wage growth is just one of many macroeconomic headwinds that we believe merit caution going forward.  The Restaurant Value Spread, as we wrote about here, is suggesting that inflation at restaurants outstripping inflation at grocery stores may be having an adverse impact on same-restaurant sales growth this year. 


The casual dining sales index shown below is a simple average of a broad selection of restaurant companies’ same-restaurant sales data.  The Knapp Track Index, which we are not permitted to illustrate directly in chart form, leads the index depicted below (correlation=0.96). 




Howard Penney

Managing Director


Rory Green





OFS: Energy Expectations

The onshore oilfield services (OFS) industry has weaker fundamentals than the consensus currently believes and valuations are still too high for companies like Baker Hughes (BHI) and Flotek Industries (FTK). Coinciding with our #EarningsSlowing theme, as OFS companies report for Q3, they could guide lower for 2013. Energy Analyst Kevin Kaiser lays out his case:


Nearly every business line that services the North America land oil and natural gas E&P sector is oversupplied due to equipment overbuild and slowing demand.  The industry could face years of excess capacity and weak profit margins.  Capacity utilization for high end drilling rigs and hydraulic fracturing equipment is now in the mid-80’s by our estimates, down from the high-90’s in 4Q11 and 1Q12.



OFS: Energy Expectations  - energyslowing



As you can see in the above chart, revenue growth expectations are lower for 2012 and 2013 compared with 2011. Margin compression and negative top line growth will likely continue for these companies. We’re not ready to get long these stocks yet, even after post-earnings pullbacks. When consensus estimates come down,


Upping forecast to 3-9% growth for September


As expected, average daily table revenues dropped off considerably following Golden Week, but is still up 20% over last year.  We are now projecting YoY GGR growth of 3-9% for the full month of October.  Remember that October of 2011 was a monthly record and up 42% over October 2010.  Hold was also above normal last year.  This is a much more difficult comparison than either November or December so we are expecting sequentially accelerating growth. 




For market share, MPEL, Galaxy, and LVS seem to be enjoying the strongest month relative to trend.  WYNN recovered somewhat but still remains well below trend.  MGM has also lost share.



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