What Do Analysts Recommend for Fast Food and Pizza Restaurants?
How Did Fast Food and Pizza Companies Fare in 4Q15?
Analysts’ recommendations
Share prices generally move in tandem with analysts’ recommendations. As analysts raise their next-12-month target prices, stocks’ share prices may also increase, and vice versa.
In this article, we’ll discuss analysts’ revised estimates and recommendations on fast food and pizza companies following their 4Q15 results.
Peer comparison
In the above chart, we can see that no analysts recommend “sells” on Restaurant Brands International (QSR), Jack in the Box (JACK), or Papa John’s (PZZA). With highest “buy” rating of 71%, PZZA appears to be the favorite, followed by Sonic (SONC), with a “buy” rating of 60%.
McDonald’s (MCD), which beat market expectations with its 4Q15 results, has a “buy” rating of 47%. The Wendy’s Company (WEN), YUM! Brands (YUM), and Domino’s Pizza (DPZ) have “buy” ratings of 45%, 38.5%, and 37.5%, respectively.
Return potential
Analysts forecast that WEN will deliver 19% returns over the next 12 months, followed by JACK at 18.9%. SONC, PZZA, and QSR are expected to have upside potentials of 17.9%, 16.5%, and 11.3%, respectively. DPZ, whose share price spiked more than 8% following its recent 4Q15 results, is expected to cool down to deliver -0.9% over the next 12 months.
When a company’s share price is lower than its target price, it doesn’t necessarily mean an automatic “buy.” Investors should carefully analyze the various matrixes that we’ve discussed in this series before investing.
You can gain exposure to restaurant stocks by investing in the iShares U.S. Consumer Services ETF (IYC), which has invested more than 4% of its portfolio in restaurant companies.
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