5 mouth-watering restaurant stocks to add to your portfolio

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The restaurant industry has made a remarkable comeback with changes in its business models and the easing of restrictions related to COVID-19. While ongoing supply chain issues, labor shortages and rising food prices remain concerns, strong consumer demand and technological advancements are expected to drive industry growth. Therefore, we believe it could be fruitful to invest in fundamentally sound restaurant stocks Bloomin’ (BLMN), Arcos Dorados (ARCO), Ruth’s Hospitality (RUTH), Biglari Holding (BH) and Potbelly (PBPB). So, let’s discuss these names in more detail.


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The easing of COVID-19 restrictions and changing business models have helped the restaurant industry rebound over the past eighteen months. However, worsening supply chain disruptions and soaring inflation could hurt industry growth in the near term.

However, as the industry continues to face supply chain challenges, labor shortages, soaring food prices, rising consumer spending and digital innovations in food deliveries and other catering establishments are catalyzing the growth of the industry. The fast-casual restaurant market is expected to growing at a CAGR of 10.6% from 2021 to 2027.

Against this backdrop, we think it might make sense to bet on fundamentally sound restaurant stocks Bloomin’ Brands, Inc. (BLMN), Arcos Dorados Holdings Inc. (ARCO), Ruth’s Hospitality Group, Inc. (RUTH), Biglari Holdings Inc. (BH) and Potbelly Corporation (PBPB).

Bloomin’ Brands, Inc. (BLMN)

BLMN in Tampa, Florida, owns and operates casual, upscale casual and fine dining restaurants internationally. It operates through two US and international segments. The company’s restaurant portfolio includes four concepts, including Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.

BLMN’s total revenue increased 28.9% year-over-year to $1.05 billion in the fourth quarter, ending December 27, 2021. Its operating income was amounted to $78.49 million, compared to an operating loss of $7.24 million in the prior year quarter, while its net profit was $60.70 million, compared to a net loss of $14.21 million in the prior year quarter. The company’s EPS was $0.59, compared to a loss of $0.16 per share in the year-ago quarter.

Analysts expect BLMN’s revenue to grow 14% year-over-year to $1.13 billion in the first quarter, ending March 31, 2022. The consensus EPS estimate of $0.73 for the first quarter, ending March 31, 2022, represents a 2.1% year-over-year improvement. over-year. Plus, it has an impressive track record of earnings surprises; it has exceeded consensus EPS estimates in each of the past four quarters. The stock has gained 6.6% since the start of the year and 4.2% over the past three months.

BLMN POWR Rankings reflect this promising prospect. The company has an overall rating of B, which translates to Buy in our proprietary rating system. POWR ratings rate stocks on 118 separate factors, each with its own weighting.

The stock also has an A rating for value and a B for quality. In category B Restaurants industry, it is ranked #8 out of 45 stocks.

To view additional POWR ratings for Growth, Sentiment, Stability and Momentum for BLMN, Click here.

Arcos Dorados Holdings Inc. (ARCO)

ARCO is a franchisee of McDonald’s restaurants. The company has the exclusive right to own, operate and franchise McDonald’s restaurants in 20 countries and territories. ARCO is headquartered in Montevideo, Uruguay.

For the fourth quarter ended December 31, 2021, ARCO’s total revenue increased 28.5% year-over-year to $780.29 million. His operating result increased by 258.1% from its value of $77.77 million a year ago, while net profit increased by 106.8% from the previous period to reach $45.56 million dollars. ARCO’s EPS was up 120% year over year to $0.22.

The consensus EPS estimate for its fiscal year 2022 represents a 48.9% year-over-year improvement to $0.33. Analysts expect its revenue to rise 26.2% year-over-year to $708.29 million for the first quarter, ending March 31, 2022. It beat consensus estimates EPS in three of the last four quarters. The stock has gained 63.7% over the past year and 58.9% over the past six months.

ARCO’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which equates to a strong buy in our POWR rating system. The stock also has an A rating for sentiment and a B rating for growth and value. Within the Restaurants the industry, it is ranked #3.

In total, we rate ARCO on eight separate levels. Beyond what we stated above, we also gave ARCO ratings for Momentum, Stability and Quality. Get all ARCO ratings here.

Ruth’s Hospitality Group, Inc. (RUTH)

RUTH develops, operates and franchises fine dining restaurants under the Ruth’s Chris Steak House name. It offers food and beverage items to special occasion diners, frequent customers and business customers. RUTH is headquartered in Winter Park, Florida.

In the fourth quarter, ended December 26, 2021, RUTH’s total revenue increased 63.8% year-over-year to $126.74 million. Its operating profit increased 160.6% from its prior year value to $12.34 million, while net profit increased 869.8% from the period of the previous year to $13.80 million. The company’s EPS was up 900% year over year to $0.40.

Analysts expect RUTH’s revenue to grow 37% year-over-year to $119.58 million in its first fiscal quarter, ending March 31, 2022. The estimate consensus EPS of $0.31 for the first quarter, ending March 31, 2022, represents a year of improvement of 19.2%. -over the year. Additionally, RUTH has an impressive history of earning surprises; it has exceeded consensus EPS estimates in each of the past four quarters. Shares of the company have jumped 14.5% since the start of the year and 14.7% over the past three months.

It’s no surprise that RUTH has an overall rating of B, which equates to Buy in our POWR rating system. RUTH has a B rating for Value, Feeling and Quality. In the Restaurants industry, it is ranked #4.

Click here to see additional POWR ratings for RUTH (stability, growth and momentum).

Biglari Holdings Inc. (BH)

BH primarily owns, operates and franchises restaurants under the Steak n Shake and Western Sizzlin names through its subsidiaries in the United States. As of December 31, 2021, the Company based in San Antonio, Texas operated 199 Steak n Shake company operated restaurants, 159 franchise partner units, 178 traditional franchise units, 3 Western Sizzlin company operated restaurants and 38 franchise units.

For its fiscal year ending December 31, 2021, BH’s revenue was $366.11 million. Its net profit was $35.48 million, compared to a net loss of $37.90 in the prior period. The company’s EPS was $111.83, compared to a loss per share of $110.05 a year earlier. And its cash and cash equivalents were $42.35 million over the period. The stock has gained 10.2% in price over the past year and 6.1% over the past month.

BH’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our POWR rating system. The stock also has a B rating for sentiment, value and quality. Within the Restaurants industry, it is ranked #10.

In total, we rate BH on eight distinct levels. Beyond what we stated above, we also assigned BH ratings for Momentum, Stability and Growth. Get all BH odds here.

Potbelly Corporation (PBPB)

PBPB owns, operates and franchises Potbelly Sandwich Shops. As of December 26, 2021, it had 443 stores in 33 states and the District of Columbia, including 397 stores and 46 stores operated under franchise. The company is headquartered in Chicago, Illinois.

During the fourth quarter, ended December 26, 2021, PBPB’s total revenue increased 37.3% year-over-year to $102.80 million. Its adjusted EBITDA was $2.56 million, compared to a loss of $6.87 in the prior period. Its cash and cash equivalents were $14.35 for its fiscal year ending December 26, 2021.

Analysts expect PBPB’s revenue to grow 25.2% year-over-year to $97.70 million for the first quarter, ending March 31, 2022. It topped consensus EPS estimates in three of the last four quarters. The stock has gained 15.1% year-to-date and 23.2% over the past three months.

It’s no surprise that PBPB has an overall rating of B, which equates to Buy in our POWR rating system. PBPB has a B rating for Momentum and Sentiment. In the Restaurants industry, it is ranked #24.

Click here to see additional POWR ratings for PBPB (Stability, Quality, Growth and Value).


BLMN shares were trading at $22.36 per share Wednesday morning, up $1.35 (+6.43%). Year-to-date, BLMN has gained 7.19%, versus a -2.91% rise in the benchmark S&P 500 over the same period.


About the Author: Spandan Khandelwal

Spandan’s is a financial journalist and investment analyst specializing in the stock market. Through its ability to interpret financial data, it aims to help investors assess a company’s fundamentals before investing.

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