These restaurant companies are expected to -2-
A company's gross margin is its net sales, less the cost of goods or services sold, divided by sales. Net sales are sales minus returns and discounts, such as coupons. The cost of goods or services sold includes the actual costs of making the items or providing the services. Gross margin is a useful measurement of pricing power, and it is always good for investors to see a combination of an expanding gross margin and increasing sales.A company's operating margin incorporates more overhead and other expenses that aren't directly related to the production of goods and services. It can be summed up as earnings before interest and taxes, divided by sales.
For the 10 companies on the list above, both of those margins improved, except for those of Kara Sushi USA Inc. (KRUS), Cava Group Inc. (CAVA) and McDonald's.
Expected sales-growth rates
Going back to our larger group of 27 U.S.-listed restaurant companies covered by at least five analysts polled by FactSet, consensus sales and EPS estimates are available through 2026 for 24 of them. We used calendar-year estimates as adjusted by FactSet, as some companies' fiscal years don't match the calendar.
Here are the 10 for which analysts expect to see the highest sales CAGR from 2024 through 2026:
Company Ticker Two-year estimated sales CAGR through 2026 Two-year estimated EPS CAGR through 2026 Market cap ($mil) Cava Group Inc. CAVA 20.3% 35.0% $9,697 Sweetgreen Inc. Class A SG 17.2% N/A $3,245 Wingstop Inc. WING 15.7% 22.8% $11,272 First Watch Restaurant Group Inc. FWRG 14.7% 28.9% $1,098 Shake Shack Inc. Class A SHAK 14.3% 32.0% $3,654 Portillo's Inc. Class A PTLO 13.4% 35.4% $617 Chipotle Mexican Grill Inc. CMG 13.4% 19.2% $87,043 Chuy's Holdings Inc. CHUY 8.4% 5.9% $451 Starbucks Corp. SBUX 8.4% 13.2% $92,236 Texas Roadhouse Inc. TXRH 8.3% 13.5% $11,216 Source: FactSet
For Sweetgreen Inc. (SG), the EPS CAGR is marked "N/A" because the company is expected to continue posting annual net losses through 2026 at least.
You can click the tickers for more data about each company, including news coverage, financials, estimates, ratings and price targets.
Click here for Tomi Kilgore's detailed guide to the wealth of information available for free on the MarketWatch quote page.
Cava Group Inc. (CAVA) tops the list for expected sales growth from 2024 through 2026, while Wingstop, our "winner" this earnings season, ranks third.
It is interesting to see Starbucks Corp. (SBUX) on the list of expected rapid growers, considering what a dismal set of quarterly numbers it reported on April 30.
Analysts' favorite U.S. restaurant stocks
For a final screen, let's look at analysts' ratings and consensus price targets. Among U.S.-listed restaurant companies covered by at least five analysts polled by FactSet, 12 have majority buy or equivalent ratings. Here they are, sorted by 12-month upside implied by the consensus price targets:
Company Ticker Share buy ratings June 7 price Consensus price target Implied 12-month upside potential Portillo's Inc. Class A PTLO 80% $10.02 $16.67 66% First Watch Restaurant Group Inc. FWRG 78% $18.18 $26.33 45% Aramark ARMK 73% $33.25 $35.60 7% Sweetgreen Inc. Class A SG 67% $32.31 $31.38 -3% McDonald's Corp. MCD 65% $256.21 $311.13 21% Darden Restaurants Inc. DRI 63% $148.54 $177.91 20% Chipotle Mexican Grill Inc. CMG 63% $3,169.02 $3,280.92 4% Red Robin Gourmet Burgers Inc. RRGB 60% $8.44 $15.63 85% Dine Brands Global Inc. DIN 60% $37.72 $54.86 45% Domino's Pizza Inc. DPZ 57% $513.55 $546.36 6% BJ's Restaurants Inc. BJRI 56% $34.13 $39.56 16% Papa John's International Inc. PZZA 55% $47.00 $67.81 44% Source: FactSet
-Philip van Doorn
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
06-10-24 1300ET
Copyright (c) 2024 Dow Jones & Company, Inc.-
Six Sports Betting and iGaming Stocks Trading at a Discount
-
4 Predictions for Stocks and the Economy for the Second Half of 2024
-
What Broadening Rally? AI Stocks Dominate Again In Q2
-
After Earnings, Is Nike Stock a Buy, a Sell, or Fairly Valued?
-
Worst-Performing Stock ETFs of the Quarter
-
Top-Performing Stock ETFs of the Quarter
-
Q2 In Review and Q3 2024 Market Outlook
-
5 Stocks to Buy for 3Q 2024
-
Industrials: Sector Offers Investment Opportunities as Performance Lags Broader Market
-
Consumer Defensives: Even Amid Macro Pressures, Deals Permeate the Landscape
-
33 Undervalued Stocks
-
Utilities: Can the Stocks Keep the Rally Going?
-
Basic Materials: Following Index Decline, We See Many Long-Term Opportunities
-
Healthcare: Valuations Look Attractive In Most Industries
-
Financial Services: Amid Uncertainties, We See the Most Value In Banks and Credit Services
-
Consumer Cyclicals: Even With Anxiety Over Spending, We See Attractive Valuations