CASUAL DINING SHORTS

We suspect that many casual dining stocks will face a long, hot summer.

 

While we reported on the tough June sales numbers in our “Casual Dining Double Dip” note two weeks ago, the results from both CAKE and PNRA are adding some perspective around the reality that the casual dining space is in a tough spot.

 

 

RRGB – Remains on the Hedgeye Best Ideas list as a SHORT.


The notion that RRGB is going to significantly outpace the rest of the casual dining space and show a significant improvement in traffic seems far-fetched.  RRGB is accelerating spending on programs that we believe will not drive the desired traffic and will ultimately result in an earnings shortfall.

 

While our original thesis suggested that the big miss could come in 3Q13, the current industry trends suggest that 2Q13 will likely come in short of expectations.  At the very least, we foresee guidance for the balance of 2013 being reduced.

 

 

EAT – Chili’s is not immune to the industry slowdown.


Similar to RRGB, we suspect that EAT will also fall victim to a subpar summer.  We like the long-term vision that EAT’s management team laid out at a recent analyst meeting, but…

 

Unfortunately, over the intermediate-term TREND, the company faces numerous issues.  Chili’s is not only part of an industry that is in secular decline, but its largest competitor (DRI) is desperate for increased traffic and will use discounting as its weapon of choice.

 

It is difficult for us to see how EAT will be able to report numbers that the street will be happy with.  We will be publishing an earnings preview on EAT to further outline what we believe the recent quarter may look like.

 

Other names in the basket of shorts should include TXRH, DRI, and BLMN.

 

 

CASUAL DINING SHORTS - BBox11

CASUAL DINING SHORTS - BBox2

 

 

 

Howard Penney

Managing Director

 


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more