Habit Restaurants (HABT) Q2 Earnings: What To Expect?

The Habit Restaurants, Inc. (NASDAQ:HABT) is set to report second-quarter 2016 results on Aug 3, after the market closes.

Last quarter, the casual restaurant company posted in-line results. The company posted positive surprises in three out of the last four quarters, with an average positive earnings surprise of 18.39%.

HABIT RESTRNTS Price and EPS Surprise

HABIT RESTRNTS Price and EPS Surprise | HABIT RESTRNTS Quote

Let’s see what is in store this quarter.

Factors at Play

Habit Restaurants offers specialty sandwiches, fresh salads, shakes and malts. The company has been posting strong restaurant revenues in addition to comps growth. The trend is expected to continue in the to-be-reported quarter supported by the company’s increased focus on menu innovation and unit growth.

Further, the company’s initiative to reduce the average cook time by five to seven minutes from order placing to delivery, is helping it to cater to customer traffic, especially during peak hours. The company is also cashing in on the rising popularity of the niche burger segment.

During first quarter 2016, the company introduced an e-mail club called the CharClub, which helped to reach out to a large number of customers and eventually improve traffic. These positives are likely to boost second-quarter results.

However, increases in labor and related expenses – mainly due to a spike in wages across most markets – are likely to hurt margins in the second quarter.

Earnings Whispers

Our proven model does not conclusively show that Habit Restaurants is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Habit Restaurants is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 10 cents.

Zacks Rank: Habit Restaurants holds a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks in the retail wholesale sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Jack in the Box Inc. (NASDAQ:JACK) , with an Earnings ESP of +1.15% and a Zacks Rank #2

Shake Shack Inc. (NYSE:SHAK) with an Earnings ESP of +7.69% and a Zacks Rank #3

Carrols Restaurant Group, Inc. (NASDAQ:TAST) with an Earnings ESP of +4.35% and a Zacks Rank #3

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