Monday Mashup: BLMN, PLKI and More

Investment Ideas

The table below lists our Investment Ideas as well as our Bench -- a list of potential ideas we are watching closely.  We intend to update this table regularly and will provide detail on any material changes.

 

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Recent Notes

09/02/14 Post-Labor Day Mashup

09/03/14 DRI: A Logical Fallacy

09/04/14 MCD: Why We Are Short

09/05/14 Employment Growth Encouraging for Restaurants

Events This Week

Tuesday, September 9th

  • DEN, PLKI CL King & Associates Best Ideas Conference
  • KKD earnings call 4:30pm EST
  • MCD August 2014 Sales and Revenue Release

Friday, September 12th

  • DRI earnings call 8:30am EST

Chart of the Day

2H14 and 2015 estimates remain too aggressive for MCD and will likely be revised lower over the coming months.

 

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Recent News Flow

Tuesday, September 2nd

  • DNKN opened its first two full expression restaurants in Modesto and Santa Monica, California.
  • DRI guided 1QF15 EPS $0.31-$0.33 vs. $0.33 consensus and proposed a new board structure that would include four incumbents, four new company nominees and four Starboard nominees.
  • BWLD launched GameBreak, a multi-platform gaming experiencing that allows guests to play a range of fantasy-style and competitive sports games in the restaurant, online, and on a mobile app.
  • RRGB announced the LTO of its Beam-N-Bacon Boozy Shake made with Jim Beam Maple Bourbon, caramel and vanilla soft serve.  The offer will run through Nov. 2nd.
  • BLMN appointed Donagh Herlihy as Executive VP Digital & Chief Information Officer.  Herlihy previously led eCommerce and global information technology strategy and operations at Avon.

Wednesday, September 3rd

  • PLKI promoted Hector Munoz to VP & Chief Marketing Officer-U.S.  Munoz will lead the company's domestic marketing efforts and will report directly to Chief Brand Experience Officer, Dick Lynch.
  • YUM disclosed the impact of supplier issues on comps in China, estimating the division's sales to be down ~13% in 3Q.

Thursday, September 4th

  • JACK announced that Frances Allen is joining the company as President of the Jack in the Box brand, effective October 27th.  Allen previously held senior leadership roles at Denny's, Dunkin' Brands, Sony Ericsson Mobile Communications, PepsiCo and Frito-Lay.

Sector Performance

The SPX (+0.5%) underperformed the XLY (+0.6%) last week.  In aggregate, casual dining and quick service stocks outperformed the SPX.

 

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XLY Quantitative Setup

From a quantitative perspective, the sector remains bullish on an intermediate-term TREND duration.

 

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Casual Dining Restaurants

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Quick Service Restaurants

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Howard Penney

Managing Director

 

Fred Masotta

Analyst