The restaurant industry has been doing fantastic this year. You can attribute a good chunk of it to a solid US economy but also a structural shift in the way that people spend money. There have been many studies which show millennials are much more likely to spend on experiences like vacations and dining out than previous generations. It’s all about making memories versus buying things.
Don’t just go out there and blindly buy into restaurant stocks though. You have to make sure that the stock you’re looking at hasn’t had recent earnings estimates revisions to the downside. That’s exactly the case we have here with today’s Bear of the Day, Zacks Rank #5 (Strong Sell) Blooming Brands (BLMN – Snapshot Report) .
Bloomin’ Brands, Inc. is a casual dining restaurant company with a portfolio of differentiated restaurant concepts. It has five concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Wine Bar and Roy’s. The Company offers its products and services through company owned and franchised locations throughout the United States and internationally. Bloomin’ Brands, Inc. is based in Tampa, Florida.
Despite a recent earnings beat, seven analysts have revised their earnings estimates to the downside for the current quarter while eight have followed suit for the current year. While the result isn’t a dramatic downside move for our Zacks Consensus Estimate, in a market where restaurants have all been doing well, it makes a statement. Our Zacks Consensus for the current year has dropped from $1.39 to $1.35 for the current year.
Shares of Bloomin Brands have shaken off the bearish sentiment but are currently butting up against resistance near $20. This area has provided enough resistance for reversals several times from late April to now. The bottom end of the summer trading range near $17 should provide some support for the price should BLMN experience some selling pressure.
Investors looking for other restaurant stocks with positive earnings estimate revisions should check out Zacks Rank #2 (Buy) stocks Del Taco (TACO – Snapshot Report) and Denny’s (DENN – Snapshot Report) .
More Stocks to Sell. Now.
Beyond our Bear Stock of the Day, today’s list of 220 Zacks Rank #5 Strong Sells demand even more urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. Many appear to be sound investments but, since 1988, such stocks have actually performed more than 11X worse than the S&P 500.