In the article, we will discuss the three restaurant stocks BMO Capital Markets is talking about in its recent report about the restaurant sector. To read the detailed analysis of the firm and its recent report, go directly to BMO Capital is Talking About These 6 Restaurant Stocks.
3. Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY)
Number of Hedge Fund Holders: 31
Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) is a Dallas-based full-service restaurant and a video arcade. The company has over 140 locations in the United States and two in Canada. Andrew Strelzik released his latest report on the company on September 19, where he maintained a Buy rating on the company shares with a $66 price target.
On September 14, Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) announced that it plans to open 11 new units across the Kingdom of Saudi Arabia, the United Arab Emirates, and Egypt. The company partnered with Abdul Mohsen Al Hokair Holding Group to add these units to its portfolio and to develop the company brand across West Asia.
Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) released its latest quarterly earnings report on September 7, posting a GAAP EPS of $0.59, missing the estimates by $.045. The revenue of $468.36 million was up 24% on a YoY basis and outperformed the forecasts by $35.44 million.
2. Bloomin’ Brands, Inc. (NASDAQ:BLMN)
Number of Hedge Fund Holders: 35
Bloomin’ Brands, Inc. (NASDAQ:BLMN) owns several casual dining restaurant chains under the Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar brands.
On August 1, BMO Capital analyst Andrew Strelzik maintained an Outperform rating on Bloomin’ Brands, Inc. (NASDAQ:BLMN) and lowered the price target to $29 from $33. Strelzik noted that the company’s Q2 earnings exceeded expectations. He added that even though the trends recovered in July from the previous month’s slowdown, they remain negative. Furthermore, Bloomin’ Brands, Inc. (NASDAQ:BLMN) management said that they don’t see the consumers managing their checks when spending at their restaurants. In fact, some of their brands continued to trade up.
Here is what Clearbridge Investments had to say about Bloomin’ Brands, Inc. (NASDAQ:BLMN) in its Q1 2022 investor letter:
“We initiated a new position in Bloomin’ Brands (NASDAQ:BLMN), in the consumer discretionary sector. The owner and operator of upscale casual dining brands, including Outback Steakhouse and Bonefish Grill, the company utilized the challenges of the COVID-19 pandemic to implement new productivity operations for its waitstaff and focus on improving corporate margins. As we transition from pandemic to endemic, the company should be able to meet the rebound in restaurant attendance with an improved cost structure and better operating leverage. We believe these long-term improvements and increased demand for dining are not reflected in the current share price.”
1. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 50
McDonald’s Corporation (NYSE:MCD) is one of the world’s largest fast-food restaurant chains in the world. On August 17, Andrew Strelzik assigned a Buy rating to McDonald’s Corporation (NYSE:MCD) and raised his price target on the stock to $300 from $285. He believes in a more decisive performance by the restaurant in Europe in the future.
Despite the economic headwinds, McDonald’s Corporation (NYSE:MCD) has managed to grow at a steady pace. On September 19, when the S&P 500 was down about 20% YTD, the company was up by 15%. Furthermore, from 2018 to 2021, the company managed to grow its revenues at a CAGR of 2% and gross profit at 8%. In addition, in the last decade, McDonald’s Corporation (NYSE:MCD)’s net profit margin has averaged above 25%, while the gross profit margin has stood at 55.3% LTM, compared to the 36% sector median.
According to our database, 50 hedge funds held bullish positions in McDonald’s Corporation (NYSE:MCD), with Bridgewater Associates being the most prominent shareholder. The firm held over 2 million company shares, worth $511.43 million.
You can also take a peek at 10 Best Wine Stocks To Buy Now and 10 Best Sugar Stocks To Buy.
