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Zoe’s Kitchen (ZOES) Consumer Discretionary - Hotels, Restaurants, & Leisure | Reports August 22, After Market Closes

Zoe’s Kitchen is scheduled to report second quarter earnings this afternoon. The chain has remained largely resilient to the broader pullback in the fast casual sector. Industry leaders Chipotle and Shake Shack have struggled for various reasons with each stock down double digits year to date. Zoes is different though. Shares have jumped 32% in 2016 thanks consecutive quarters of better than expected results with strong growth. Early signs are pointing to another robust report tonight.

Analysts at Estimize are calling for earnings per share of 7 cents, 36% higher than the same period last year. That estimate has increased 11% since Zoe’s most recent report in May. Revenue for the period is estimated to have increased by 24% to $67.31 million. Historically the market has responded well, rising 2% through the 5 days following a report. 

In its albeit short history the fast casual restaurant has posted better than expected revenue and earnings in almost all of its publicly reported quarters. Improving traffic trends and a strong product portfolio have driven sales and comps in previous quarters. These trends should continue to bode well for the quarter to be reported. Frequent menu innovations and an increased focus on promotional campaigns will be key to future success. Additionally a new focus on catering and cost cutting initiative undertaken during the quarter will provide a boost to both the top and bottom line.

On the downside, increasing labor costs and higher operating expenses could pressure margins and profitability in the quarter. Based on how this company is trending it would be surprising they printed a miss.