Three restaurant stocks highlight shifting trends

Trevir Nath, director of content
Buffalo Wild Wings
Buffalo Wild Wings | Facebook

The trends that once favored fast casual chains like Chipotle are slowly shifting back to the fast food and casual dining sectors. The swing has favored big names like McDonald's and Buffalo Wild Wings that have seen consistent growth after pushing out strategic, system-wide changes over the past two years.

But for those not named Chipotle, fast casual operators haven't had it all that bad. In fact, Panera is coming off a superb first quarter that proved growth wasn't a foreign concept.

Tuesday's results from Panera, McDonald's and Buffalo Wild Wings highlight each category of the restaurant industry but also paint a clearer picture of the state of consumer spending. McDonald's kicks things off with its second-quarter results in the morning, followed by Panera and Buffalo Wild Wings in the afternoon.

More from Estimize:

Don't expect a Las Vegas Sands turnaround just yet

Will Apple weakness hurt Texas Instruments this quarter?

Will Gilead earnings rebound this quarter?

After Steve Easterbrook assumed the position of CEO in March 2015, McDonald's has tasted good for both consumers and investors. Management was quick to adopt many fast casual concepts in its efforts to reignite growth. This includes updating stores to create an inviting atmosphere, offering healthy alternatives and using high-quality ingredients in their menu items.

On top of this, frequent menu innovations and limited-time promotions have paid dividends. The McPick 2 and shift to all day breakfast have been key to boosting comparable-store sales and traffic trends.

However, its recovery might be short lived. Ahead of its earnings an analyst at Credit Suisse downgraded the stock and cut same-store sales estimates, citing a broader pullback in consumer spending and Brexit concerns. McDonald's has the largest exposure to Europe among U.S.-listed restaurants with 37 percent of its total revenue coming from the region.

The Estimize community has lowered its revenue target in light of the increasing global volatility. Analysts are calling for earnings per share of $1.40 on $6.32 billion in revenue, according to the crowdsourced data. Compared to the year prior, earnings are projected 11 percent higher with sales down as much as 3 percent.

After the market closes, both Panera and Buffalo Wild Wings are scheduled to report their second-quarter results.

Panera is successfully bucking the trend that fast casual is a thing of the past. The company is coming off a better-than-expected first quarter in which it topped the Estimize consensus on both the top and bottom line. Mid-single-digit revenue growth and double-digit earnings growth surprised investors who had become accustomed to negative bottom line comps.

Strategic initiatives to improve the customer experience and new menu innovations have been key to Panera's recovery. Its approach to sustaining this upward trend includes the implementation of Panera 2.0, improving operational efficiencies, hiring dedicated staff and increasing expansion capabilities.

It's expected that positive same-store sales and traffic trends will deliver strong Q2 results. Analysts are looking for earnings per share of $1.76 on $700.52 million in revenue, according to the Estimize consensus data. Current estimates represent a projected 9 percent increase on the bottom line and 3 percent on the top compared to a year earlier. Shares are up over 10 percent since the start of the year.

Consistent with the general theme, Buffalo Wild Wings has enjoyed positive comps over the past several quarters driven by a robust events calendar and new menu launches. The full-service restaurant kicked off its fiscal 2016 with double-digit gains on both the top and bottom line. However weaker-than-expected same-store sales were enough to send the stock tumbling. Shares are down nearly 12 percent since the start of the year.

This hasn't stopped Buffalo Wild Wings from ramping up its marketing efforts. Key partnerships with Heineken and the NCAA have helped promote seasonal sporting events such as March Madness and the Euro Cup Tournament. Buffalo Wild Wings also updated its website and mobile app to create a better take-out experience. These initiatives are expected to offset some of the losses from higher operating expensive, notably higher chicken and labor costs.

Analysts are calling for earnings per share of $1.26 on $502.32 million in revenue, according to the Estimize consensus data. Compared to the same period last year, earnings are projected to grow by 15 percent with revenue up by 18 percent.

As more reports pile up within the industry over the next few weeks, we will soon know which subset of the restaurant industry reigns supreme.

How do you think these names will report? Be included in the Estimize consensus by contributing your estimates here!