Will High Costs Hurt Habit Restaurants' (HABT) Q3 Earnings?
Zacks Investment Research | Oct 29, 2017 11:29PM ET
The Habit Restaurants, Inc. (NASDAQ:HABT) is set to report third-quarter 2017 results on Nov 1, after market close.
Notably, the previous quarter marked Habit Restaurants’ 54th consecutive year-over-year growth in comparable restaurant sales.
In fact, the company expects its differentiated brand positioning, successful marketing and culinary innovations, excellent operational execution, high quality limited time offers, targeted digital strategies and innovative media partnerships to help in retaining brand loyalty, and thereby drive comps in the to-be-reported quarter as well.
In fact, the Zacks Consensus Estimate for company-operated comps in the quarter is pegged at a growth of 0.3% year over year.
Further, the consensus estimate for the quarter’s total revenue is pegged at $85.6 million, reflecting an increase of 19% over the prior-year quarter.
Nevertheless, we believe that the ongoing choppy sales environment in the overall restaurant space might limit revenue growth to some extent.
Meanwhile, though the company is looking to expand its presence via new unit openings, an increase in expenses related to pre-opening costs and the development and management of new units might dent third quarter’s profits.
Incremental investments in marketing programs and promotional activity as well as consistently higher labor expenses are also expected to weigh on margins. Furthermore, at its second-quarter conference call, management noted that commodity costs, particularly ground beef, chicken and produce might remain elevated in the short term. This, in turn, could pressurize margins in the to-be-reported quarter.
Notably, for the third quarter, the Zacks Consensus Estimate for earnings is pegged at 3 cents, reflecting a decline of 40% year over year.
Also, our quantitative model predicts that Habit Restaurants does not have the right combination of two main ingredients — a positive Zacks Investment Research
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