5 Restaurant Stocks Poised for Earnings Surprises This Season

Industry Overview - The restaurant industry in Q4 2024 is expected to benefit from increased sales driven by rapid menu price hikes, average check growth, and expansion efforts [1] - Quick-service restaurant brands have shown remarkable stability and resilience in traffic and sales, attributed to price-conscious consumers supporting steady earnings [2] - The industry is experiencing growth in off-premise sales, including delivery, takeout, and drive-thru options, with many operators testing ghost or virtual kitchens [3] Company Performance - Restaurant operators are partnering with delivery channels and digital platforms to drive incremental sales, with collaborations with DoorDash, Grubhub, and others contributing to growth [4] - Despite growth opportunities, restaurant operators face high operational costs, including increased pre-opening and marketing expenses, which are affecting margins [5] Specific Company Insights - Brinker International, Inc. (EAT) is expected to report increased revenues in Q2 fiscal 2025, driven by effective marketing, improved menu pricing, and higher traffic, with an Earnings ESP of +9.99% [8][9] - Chipotle Mexican Grill, Inc. (CMG) is likely to benefit from digital efforts and new restaurant openings, with an Earnings ESP of +1.00% and a consensus estimate suggesting a 14.3% earnings growth [10][11] - The Cheesecake Factory Incorporated (CAKE) is projected to see earnings and revenue growth in Q4 2024, supported by service digitization and new menu offerings, with an Earnings ESP of +2.20% [12][13] - Wingstop Inc. (WING) is expected to report growth driven by comps growth and technological initiatives, with an Earnings ESP of +2.18% [13][14] - Shake Shack Inc. (SHAK) is likely to report increased earnings and revenues, benefiting from same-shack sales and digital initiatives, with an Earnings ESP of +0.65% [15][16]