10 Best Restaurant Stocks To Buy According to Analysts

7. Cannae Holdings, Inc. (NYSE:CNNE)

Average Share Price Upside Potential as of November 12: 27.92%

Cannae Holdings, Inc. (NYSE:CNNE) is an investment firm that primarily invests in restaurants, football clubs, healthcare technology, and financial services. It was founded in 2014 and is based in Las Vegas, Nevada. The company’s portfolio of restaurants includes Ninety Nine Restaurant & Pub and O’Charley’s. Cannae has equity ownership interests of 88.5% and 65.4%, respectively, in these two restaurants.

Both restaurants fall in the casual dining segment of the restaurant industry. Ninety Nine Restaurant & Pub was founded in 1952 and now has outlets in 93 locations across seven northeastern states, while O’Charley’s was first established in 1971 and comprises four franchise locations and 58 company-owned restaurants in the southern and midwestern states.

Cannae Holdings, Inc. (NYSE:CNNE) declared financial results for the third quarter of 2024 on November 12. Quarterly total operating revenue was posted at $113.9 million, of which 90% was restaurant revenue. However, revenue was down from $144 million during the same period last year, due to a reduction of store locations.

Since last year, the company has been closing numerous unprofitable and struggling restaurants which were compressing margins amid inflation in the country. As a result, operating expenses declined 33% year-over-year to $133 million, attributable to lower external manager fees and restaurant item costs. The cost of restaurant revenue was also 20% lower from the same period last year because of reduced restaurant locations.

Recognized gains for the quarter stood at $23 million, a significant improvement from the $130 million of losses last year. However, the gains were primarily non-cash fair-value pickups relating to Paysafe and Dayforce shares. The company wants to transition out of public securities to private investments. As part of this strategy, on October 7, Cannae Holdings, Inc. (NYSE:CNNE) in partnership with KDSA Investment Partners acquired a majority stake in The Watkins Company, a 156-year-old brand known for its flavoring products.

The company is hopeful that this business will provide cash flow through equity distributions and preferred dividends. Cannae’s balance sheet remains stable with $40 million in cash and listed securities valued at over $1.4 billion. It has returned around $243 million to shareholders this year through buybacks and dividends, and plans on paying a quarterly dividend of 12 cents per share in December as well.

Cannae Holdings, Inc. (NYSE:CNNE) is among the best restaurant stocks to buy according to analysts with a consensus Buy rating.