2014

The Zacks Analyst Blog Highlights:Panera Bread, Chipotle Mexican Grill, Yum! Brands, Domino's Pizza and Dunkin' Brands Group

CHICAGO, Feb. 28, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Panera Bread Co. (Nasdaq: PNRA-Free Report), Chipotle Mexican Grill, Inc. (NYSE: CMG-Free Report), Yum! Brands, Inc. (NYSE: YUM-Free Report), Domino's Pizza, Inc. (NYSE: DPZ-Free Report) and Dunkin' Brands Group, Inc. (Nasdaq: DNKN-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

Growing Globally: 3 Fast-Food Choices

Fast food or quick service restaurants have had a good earnings season till date. Some of these results are still to come in, but it seems that despite mixed economic data, the sector has delivered. However, new challenges have emerged for the sector recently, which may cause some hiccups in the future.

The Rise of Fast Casual Chains

An emerging trend in recent years is the fact that consumers seem to be switching their spending from quick-service or fast food to "fast casual" restaurants. Unlike conventional casual dining establishments, these restaurants do not normally offer table service. However, they offer better quality of food and a better ambience for customers.

Growing awareness about the quality of food among consumers is significantly responsible for the success of fast casual restaurants.  Panera Bread Co. (Nasdaq: PNRA-Free Report) and Chipotle Mexican Grill, Inc. (NYSE: CMG-Free Report) have emerged as key players in the space.

Data from global information company NPD group shows that fast casual restaurant visits rose 8% in 2013. Spending at such establishments grew 10%, compared to a 2% increase in all restaurants during the same period.

Growing Global Footprint

Meanwhile, the American consumer has become more and more health conscious. This has happened at individual as well as governmental levels. New York City requires fast food restaurants to specify the number of calories on their menus. The city's health department has banned restaurants from using any trans-fats in their food.

Fast food brands have adapted by offering healthier menu options and reducing portion sizes. However, such a stringent attitude towards their fare has prompted them to look for greener pastures. With a fast growing and prosperous middle class, emerging markets like China and India have emerged as the destinations of choice. Traditional brands have greatly benefited from this development, but several others are poised to gain from this change.

Below we present three fast food chains which are growing or have the potential to grow quickly in the international arena, each of which also has a good Zacks Rank.

Yum! Brands, Inc.

Yum! Brands, Inc. (NYSE: YUM-Free Report) owns KFC, the fastest growing quick service international brand. Despite avian flu concerns in China, which resulted in comps dropping 4% in that key market, the company has posted good fourth quarter results.

In fact, the 4% drop was still an improvement over last fiscal year's decline of 13%. Overall, comps grew 2% in the international space which contributes around 70% of the company's profits.  

Yum! Brands, Inc. holds a Zacks Rank #2 (Buy) and has expected earnings growth of 14.70%. The forward price-to-earnings Ratios (P/E) for the current financial year (F1) is 20.20.

Domino's Pizza, Inc.

Domino's Pizza, Inc. (NYSE: DPZ-Free Report) domestic stores comps were up 3.7% in the fourth quarter. However, they were lower than the third quarter comps of 5.4% and the year-ago level of 4.7%. On the other hand, comps took a higher jump in international stores, recording 7% growth (foreign currency translation excluded).

The international comps were also better than the third-quarter comps of 5%. Excluding the impact of foreign currency translation, global retail sales were up 9.9% year over year.

Currently the company holds a Zacks Rank #2 (Buy) and has expected earnings growth of 16.10%. It has a P/E (F1) of 26.57.

Dunkin' Brands Group, Inc.                                   

Our third choice is Dunkin' Brands Group, Inc. (Nasdaq: DNKN-Free Report). The company owns Baskin-Robbins, one of the fastest growing brands in the international space. In the fourth quarter, domestic sales grew 7.4% at Dunkin' Donuts coffee outlets. Baskin-Robbins store sales increased by 5.8%.

However, international sales also grew at a fast clip. Established restaurant sales increased 10.9% for Baskin-Robbins stores. Dunkin' Donuts international stores registered a 2.9% increase in sales.

Besides a Zacks Rank #2 (Buy), Dunkin' Brands Group, Inc. has expected earnings growth of 20.60%. It has a P/E (F1) of 28.31.

Fast food restaurants are increasingly focusing on the international space to grow sales and profits. These three stocks follow this very strategy and would make good additions to your portfolios.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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