3 Stocks To Buy In The Restaurant Industry

One market that will never cease to be important in civil society is food. People love to go out and spend money on juicy burgers, toasted sandwiches, and made to order carne asada tacos topped with avocado, cilantro, and onion. The Retail Restaurant Industry is in the top 25% in our Zacks Industry Rank, with 18 of the 55 companies having a Zacks Rank #2 (Buy) or better.

Today, I am going to profile two companies within this industry that have a Zacks Rank #1 (Strong Buy) and one that has a Zacks Rank #2 (Buy). These choices could potentially make great additions to your portfolio. Let’s take a look at some important figures for the following companies:

1. Potbelly Corp. (PBPB -Snapshot Report)

Potbelly Corporation (PBPB - Snapshot Report) Stock Price | FindTheCompany

Potbelly Corp. is the Chicago based eatery with exquisite toasted sandwiches, fresh baked cookies, and tasty milkshakes. The sandwich company has a Zacks Rank #2 (Buy) and a VGM (value, growth, and momentum) aggregate grade of “B.”

In the earnings period ending in December 2015, Potbelly outperformed our earnings estimate by 33.33%. For their upcoming quarter ending in March 2016, Potbelly received one positive earnings revision, and an additional three positive revisions for the quarter ending in June 2016. For the year, Potbelly has four positive earnings revisions.

Over the past year, Potbelly has seen EPS growth of 33.33% and sales growth of 12.13%. The company has also improved its net margins quarter-over-quarter by 7.1% and its operating margins quarter-over-quarter by 5.2%. Furthermore, Potbelly’s price change percentage relative to the S&P 500 over a 12 week period is 12.3%.

2. Dave & Buster’s Entertainment, Inc. (PLAY - Snapshot Report)

Image via daveandbusters.com

Dave & Buster's Entertainment Inc. is America’s premier “beercade” chain. If you love playing skee-ball, Cruis’n USA, and air hockey while drinking a beer and eating a burger, than Dave & Buster’s is the place for you. The company has a Zacks Rank #1 (Strong Buy) and a VGM aggregate grade of “A.”

Over the past six earnings periods, Dave & Buster’s has outperformed our estimate every time, most notably in the period ending in October 2015 when the company’s surprise percentage was 300%. In the company’s most recent earnings quarter, Dave & Buster’s outperformed our estimate by 23.26%.

Furthermore, Dave & Buster’s has had four positive earnings revisions for the quarter ending in July 2016 – two of those in the past seven days – and a total of ten positive earnings revisions for the company’s current year – two in the past seven days and four in the past thirty days.

Over the past year, Dave & Buster’s saw EPS growth of 65.62% and sales growth of 13.11%. The company has also improved its net margins quarter-over-quarter by 12.6% and its operating margins quarter-over-quarter by 12.44%. Moreover, Dave & Buster’s decreased its quarter-over-quarter debt-to-equity by 11.1% and its debt-to-capital by 6.1%

3. Carrols Restaurant Group, Inc. (TAST - Snapshot Report)

Carrols Restaurant Group Inc. (TAST - Snapshot Report) Stock Price | FindTheCompany

Carrols Restaurant Group operates three restaurant brands, including Pollo Tropical and Taco Cabana operated restaurants in 16 states. The largest Burger King franchisee has a Zacks Rank #1 (Strong Buy) and a VGM (value, growth, and momentum) aggregate grade of “B.”

Over the past two quarters, Carrols Restaurant Group has crushed our earnings estimates. In the period ending in September 2015, the company outperformed our estimate by 220%, and in the ensuing earnings period outperformed our by 500%.

Over the past year, Carrols Restaurant Group has seen EPS growth of a staggering 700% and sales growth of 18.75%. The company has also improved its operating margins quarter-over-quarter by 2,625%. Furthermore, Carrols Restaurant Group’s price change percentage relative to the S&P 500 over a 12 week period is 17.06% and year-to-date change of 22.69%

Carrols Restaurant Group decreased its quarter-over-quarter debt-to-equity by 9.1% and its debt-to-capital by 2.94%.

Disclosure: None.

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