5 restaurant stocks to explore amid Thanksgiving week

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 5 restaurant stocks to explore amid Thanksgiving week
Image source: © Burcinaybars | Megapixl.com

Highlights:

  • The QSR stock soared over 11 per cent in 2022.
  • Revenue of Texas Roadhouse, Inc. (TXRH) surged over 14 per cent YoY in Q3 FY22.
  • Revenue of Bloomin' Brands jumped over four per cent YoY.

Investors generally keep a close track of consumer stocks amid the holiday season. However, the rising inflation and increasing borrowing costs have weighed on consumer sentiment so far through the year while daunting their spending.

But, the recent earnings from some of the retail firms showed that the American retailers have managed to maintain a stable momentum compared to the other mega-cap growth firms, despite the economic challenges.

The recent scenario, along with some key economic data, has also suggested that Americans have maintained their spending more on services rather than goods. In addition, some analysts believe that restaurant spending would further receive a boost amid the holiday season.

With anticipation over more consumers going out for dining during the holiday season, especially during Thanksgiving on Thursday, November 24, and Black Friday the next day, some analysts are bullish about the sector.

In addition, the US restaurant segment has also witnessed robust job growth recently, indicating that employers are focusing on their hiring to meet the increasing consumer demand.

Labor Department's job data for October showed that the hospitality and leisure industry added 35,000 jobs in the month. Although the sector is still below one million jobs from its pre-pandemic level, some believe more jobs might be added during the holiday season.

Meanwhile, some of the players from the restaurant segment include McDonald's Corporation (NYSE: MCD), Yum! Brands, Inc. (NYSE: YUM), Restaurant Brands International Inc. (NYSE: QSR), Texas Roadhouse, Inc. (NASDAQ: TXRH), and Bloomin' Brands, Inc. (NASDAQ: BLMN). So, let's take a look at how the restaurant operators have performed in recent days and their key stock details.

McDonald's Corporation (NYSE: MCD)

McDonald's Corporation is a leading American fast-food restaurant chain operator with a dividend yield of 2.02 per cent. The stock of the US$ 201.24 billion market cap global foodservice retailer surged over two per cent YTD and around eight per cent YoY.

The MCD stock rose over 19 per cent in the quarter through November 22 and was at its 52-week high of US$ 281.67 on November 10, 2022.

On October 13, 2022, the fast food firm declared a quarterly cash dividend of US$ 1.52 apiece on its common stock, payable on December 15, 2022, reflecting a 10 per cent increase from the previous quarter's dividend.

In Q3 FY22, the company's global comparable sales rose 9.5 per cent with growth across all its segments, it said, while its US comparable sales jumped over six per cent, noting the ninth straight quarter of comparable sales growth for the segment.

However, McDonald's Corporation noted a five per cent decrease in its consolidated revenue of US$ 5.87 billion in Q3 FY22, and its net income fell eight per cent YoY to US$ 1.98 billion.

Yum! Brands, Inc. (NYSE: YUM)

Another leading fast food restaurant chain operator, Yum! Brands, Inc. had a dividend yield of 1.83 per cent. The firm's stock, which focuses on building a global restaurant brand through partnering with franchise operators, fell 10 per cent YTD while soaring over 17 per cent in the quarter.

On November 14, the Louisville, Kentucky-based restaurant company declared a dividend of US$ 0.57 apiece on its common stock, payable on December 9 this year.

Yum! Brands Inc's revenue totaled US$ 1.64 billion in Q3 FY22, and its net income totaled US$ 331 million, while in Q3 FY21, its net income was US$ 528 million on revenue of US$ 1.60 billion.

Restaurant Brands International Inc. (NYSE: QSR)

Restaurant Brands International is a Toronto-based fast food restaurant holding firm with a dividend yield of 3.24 per cent. The Canadian-American quick service restaurant service firm's stock rose over 11 per cent YTD and about 16 per cent YoY.

In the running quarter through November 22, the QSR soared over 27 per cent and touched its 52-week high of US$ 68.23 on this Monday, November 21.

Restaurant Brands International's net income was US$ 530 million on revenue of US$ 1.72 billion in Q3 FY22. Both the metrics were up from an income of US$ 329 million on revenue of US$ 1.49 billion in the year-ago period.

Texas Roadhouse, Inc. (NASDAQ: TXRH)

The restaurant firm specializing in steaks in a Texan and Southwestern cuisine style, Texas Roadhouse Inc. holds a dividend yield of 1.88 per cent. The steak restaurant firm's stock rose 10 per cent YTD and about nine per cent YoY.

On a quarter-to-date basis, the TXRH stock gained over 12 per cent and was at its 52-week high of US$ 101.75 on November 11, 2022. The company's board authorized a cash dividend payment of US$ 0.46 per share on its common stock on November 10, which would be distributed among the investors on December 23, 2022.

In Q3 FY22, Texas Roadhouse's revenue rose 14.3 per cent YoY to US$ 993.29 million, and its diluted EPS was US$ 0.93 apiece, up 23.7 per cent YoY.

Bloomin' Brands, Inc. (NASDAQ: BLMN)

Bloomin' Brands Inc is a restaurant holding firm that owns and manages many casual dining restaurants. The casual dining restaurant chain operator noted a gain of 10 per cent YTD and about 21 per cent YoY in its stock price.

Bloomin' Brands' revenue noted a 4.5 per cent YoY surge to US$ 1.05 billion in the latest quarter, while its diluted EPS was US$ 0.34 apiece, against US$ 0.03 in Q3 FY21.

Stock performance of five US restaurant stocksSource: ©Kalkine Media®; © Canva via Canva.com

Bottom line:

Commerce Department's report from last Wednesday, November 16, showed that the sales in US bars and restaurants surged 1.6 per cent in October, following a jump of 0.5 per cent in the prior month, while the overall retail sales ticked up 1.3 per cent on a monthly basis.

The sector was among the worst-hit segments during the COVID-19 pandemic, as consumers were forced to stay home. The consumers shifted their spending on goods in that period, rather than focusing on services.

In addition, the sector seemed to have gained some momentum, as now the consumers are focusing more on the services and going out for leisure. With Americans shifting their focus to services, with sales at bars and restaurants being the only service segment of the retail sales report, some investors are keeping a close watch on the sector.

Dow Jones US Restaurants and Bars Index surged over 16 per cent in the quarter, while soaring nearly five per cent in November, the Refinitiv data showed. However, the index plummeted by around seven per cent on a year-to-date basis.

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