For Immediate Release
Chicago, IL – May 6, 2010 – Today, Zacks Equity Research discusses the Restaurant Industry, including Buffalo Wild Wings Inc. (BWLD), McDonald’s (MCD), Chipotle Mexican Grill Inc. (CMG) and Red Robin Gourmet Burgers Inc. (RRGB).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/33839/Restaurant+Industry+Stock+Review+-+May+2010.
Despite the sluggish environment, there are defensive stocks in the restaurant industry that promises long-term growth opportunities. Buffalo Wild Wings Inc. (BWLD) offers investors one of the strongest growth stories in this space with an annual growth target of 13% to 15% in units and 20% in net earnings. Buffalo Wild Wings has also been able to consistently deliver positive comps even when the recession hit the economy.
With consistent earnings and a healthy balance sheet, McDonald’s (MCD) provides relative safety and moderate growth opportunities in the current scenario and exposure to faster-growing international markets.
Another stock, Chipotle Mexican Grill Inc. (CMG), has remained largely unruffled by the recent economic slowdown. The company is well-positioned to expand rapidly while generating improved earnings, margins and returns on invested capital. In fiscal 2010, the company plans to open 120 to 130 new restaurants, reflecting a growth of 12.6% to 13.6%. In fiscal 2009, the company opened 121 new restaurants and closed 2 locations, reflecting a net growth of 14.2%.
Offsetting these opportunities in the restaurant industry are stocks that still lack sheen to an extent. Nearly 50% of Red Robin Gourmet Burgers Inc. (RRGB) and two-thirds of BJ’s Restaurants outlets are located in areas that have been hit hard by the recent housing downturn and economic slowdown. These include California, Arizona, Nevada, Colorado, Oregon and Washington. This may dampen the company’s growth potential.
The financial distress has engulfed all the business sectors, and the restaurant industry has not been immune, either. The recent global meltdown has rocked the restaurant industry and it will take time to completely come out of the woods.
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