Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Portillo's (NASDAQ:PTLO) and its peers.
Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
The 14 traditional fast food stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 0.6%.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Luckily, traditional fast food stocks have performed well with share prices up 12.9% on average since the latest earnings results.
Portillo's (NASDAQ:PTLO)
Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ:PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.
Portillo's reported revenues of $181.9 million, up 7.5% year on year. This print fell short of analysts’ expectations by 1.4%. Overall, it was a slower quarter for the company with a miss of analysts’ earnings estimates.
Michael Osanloo, President and Chief Executive Officer of Portillo’s, said, “We delivered sequential improvement in both revenue and margin this quarter as we continued to prioritize sales and transaction growth. We are confident that our strategic plan is focused on the right factors, allowing us to navigate near-term challenges and seize opportunities for continuous improvement. We're now on track to open at least 10 restaurants in 2024, including three full-service locations with an optimized footprint. We continue to successfully lower our build costs as we bring these restaurants online, which will support industry-leading returns on investment.”
Interestingly, the stock is up 38.4% since reporting and currently trades at $12.30.
Read our full report on Portillo's here, it’s free.
Best Q2: Dutch Bros (NYSE:BROS)
Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE:BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.
Dutch Bros reported revenues of $324.9 million, up 30% year on year, outperforming analysts’ expectations by 2.4%. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA and earnings estimates.
Dutch Bros achieved the fastest revenue growth and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 8.2% since reporting. It currently trades at $34.61.
Is now the time to buy Dutch Bros? Access our full analysis of the earnings results here, it’s free.
Slowest Q2: McDonald's (NYSE:MCD)
Arguably one of the most iconic brands in the world, McDonald’s (NYSE:MCD) is a fast-food behemoth known for its convenience, value, and wide assortment of menu items.
McDonald's reported revenues of $6.49 billion, flat year on year, falling short of analysts’ expectations by 2.1%. It was a slower quarter as it posted a miss of analysts’ EBITDA and earnings estimates.
Interestingly, the stock is up 18.5% since the results and currently trades at $298.65.
Read our full analysis of McDonald’s results here.
Papa John's (NASDAQ:PZZA)
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ:PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Papa John's reported revenues of $507.9 million, down 1.3% year on year. This print came in 2.5% below analysts' expectations. Aside from that, it was a satisfactory quarter as it logged an impressive beat of analysts’ EBITDA estimates.
The stock is up 21.6% since reporting and currently trades at $51.66.
Read our full, actionable report on Papa John's here, it’s free.
Wendy's (NASDAQ:WEN)
Founded by Dave Thomas in 1969, Wendy’s (NASDAQ:WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.
Wendy's reported revenues of $570.7 million, up 1.6% year on year. This number came in 1% below analysts' expectations. Aside from that, it was a mixed quarter as it also produced favorable earnings guidance for the full year but a miss of analysts’ earnings estimates.
The stock is up 16% since reporting and currently trades at $19.67.
Read our full, actionable report on Wendy's here, it’s free.
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