The Zacks Analyst Blog Highlights: D.R. Horton, Red Robin Gourmet Burgers, BJ's Restaurants, Chipotle Mexican Grill and Jamba

News provided by

Aug 20, 2014, 09:30 ET

CHICAGO, Aug. 20, 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 D.R. Horton Inc. (NYSE:DHI-Free Report), Red Robin Gourmet Burgers Inc. (Nasdaq:RRGB-Free Report), BJ's Restaurants, Inc. (Nasdaq:BJRI-Free Report), Chipotle Mexican Grill, Inc. (NYSE:CMG-Free Report) and Jamba, Inc. (Nasdaq:JMBA-Free Report).

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

Here are highlights from Tuesday's Analyst Blog:

Should You Be Concerned About D.R. Horton's New Strategy?

On Aug 18, 2014, we issued an updated research report on D.R. Horton Inc. (NYSE:DHI-Free Report).

On Jul 24, D.R Horton reported mixed third-quarter fiscal 2014 results, missing the Zacks Consensus Estimate for earnings but beating the same for revenues. Adjusted earnings of 32 cents per share declined 23.8% year over year due to higher incentives, reduced gross margins, higher SG&A ratio and massive inventory/land impairment charges in the Mid-west region hurt earnings in the quarter. Homebuilding climbed 27.3% year over year due to higher closings and pricing gains.

D.R. Horton offers a diversified line of homes across various price points through its multi-brand platform. Moreover, the company enjoys one the broadest geographic diversity in the industry and is not dependent on any one market. Further, the company's land and lot position is strong which will enable it to meet demand in fiscal 2014 and 2015.

At the second-quarter conference call, management discussed its new strategy to focus on improving sales pace across its markets to achieve a 20% return on inventory. In an effort to improve the sales pace, management increased the level of incentives in many communities. Though order trends improved in the quarter through this strategy, it took a toll on gross margins — a concern in our view. However, management seems confident of this new strategy.

Moreover, supply shortages and rising costs of building materials, labor and land raises serious concerns about stability in the housing market.

D.R. Horton carries a Zacks Rank #3 (Hold).

Red Robin Downgraded to Strong Sell After Dismal Q2

On Aug 16, 2014, Zacks Investment Research downgradedRed Robin Gourmet Burgers Inc. (Nasdaq:RRGB-Free Report) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Red Robin witnessed sharp downward estimate revisions after reporting dismal results in the second-quarter 2014. Shares of the company also declined almost 19% in the trading session on Thursday, last week, as the company missed the Zacks Consensus Estimate for both earnings and revenues in the second quarter.

On Aug 14, Red Robin reported second-quarter adjusted earnings of 68 cents per share which missed the Zacks Consensus Estimate of 90 cents by 24.4% and declined 11.7% year over year. Earnings were affected by lower-than-expected revenues and lower restaurant-level operating profit margins.

The company's revenues of $256.1 million also missed the Zacks Consensus Estimate by 3%, due to sluggish comps. Comps grew only 1.2%, much lower than prior-quarter comps growth of 5.4%, due to 2.5% decline in average guest count partly offset by a 3.7% rise in average guest check.

Additionally, the company's earned lower franchise royalties and fee revenues in the quarter due to the acquisition of 32 franchised restaurants in the U.S. and Canada.

Further, an 11% year-over-year hike in ground beef costs increased cost of sales by 60 basis points (bps) from the year-ago quarter. Therefore, restaurant-level operating profit margin declined 110 bps to 22.2%. Apart from this, increased food and beverage expenses, higher other operating costs and occupancy as a percentage of sales lowered the margins.

Not surprisingly, analysts lowered their earnings estimates significantly for Red Robin. Therefore, the Zacks Consensus Estimate for fiscal 2014 declined 8.8% to $2.58 per share over the last 7 days. For 2015, the Zacks Consensus Estimate nosedived 7.4% over the same time frame.

Other Stocks that Warrant a Look

Some better-ranked stocks in the restaurant industry include BJ's Restaurants, Inc. (Nasdaq:BJRI-Free Report), Chipotle Mexican Grill, Inc. (NYSE:CMG-Free Report) and Jamba, Inc. (Nasdaq:JMBA-Free Report). All these stocks sport a Zacks Rank #1 (Strong Buy).

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

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on DHI - FREE

Get the full Report on RRGB - FREE

Get the full Report on BJRI - FREE

Get the full Report on CMG - FREE

Get the full Report on JMBA - FREE

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

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.

Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.