Consumer Discretionary
Gordon Haskett Research Advisors
Jeff Farmer sees additional beat and raise quarters coming with Chili's SSS and EPS momentum showing little if any signs of slowing. Q2 EPS of $2.80, materially outpaced the $1.80 Street estimate driven by stronger-than-expected Chili's SSS (+31.4%) and a better-than-expected RL margin (19.1%). Menu innovation & value in concert with highly effective traditional and social media messaging have combined to bring customers into Chili's, while investments in food quality, facility improvements and staffing, have kept customers coming back. Jeff’s FY25E EPS increases to $8.43, with EBITDA increasing to $710m and company SSS increasing to +20.1%.
Edition: 204
- 07 February, 2025
Consumer Discretionary
Investors looking for short ideas with exposure to tightening credit conditions might consider current OWS recommendation EAT (TP $23; 40% downside), which has two tranches of senior notes totalling $650m that are set to mature over the next 19 months. The company is likely to have to refinance both notes at less attractive terms, which will impact profitability beginning in FY24. Given OWS’s expectations for EAT’s operating margins to fall towards 1-2% over the next few years, the higher interest payments should further pressure the company’s razor thin margins, potentially creating additional downside for shares.
Edition: 157
- 31 March, 2023
Rapidly detecting meaningful language changes in 10Qs / 10Ks
HII: Takeover interest? The following wording has been removed from its 2022 10K vs. last year, "These provisions may discourage acquisition proposals or delay or prevent a change in control, which could reduce our stock price". General Motors: China rethink? “Pursuing opportunities in the Chinese market is an important component of our global growth strategy”, has now been removed from its 10K. ServiceNow: Brighter growth rate outlook; dividends set to resume; strategic transactions? US Steel: Covenant concerns; customer payment delays? Brinker International: Missing performance targets.
Edition: 154
- 17 February, 2023