Habit Restaurants (HABT) Q4 Earnings: What Awaits The Stock?

The Habit Restaurants, Inc. (NASDAQ:HABT) is set to report fourth-quarter and full-year 2016 results on Mar 2, after market close.

Last quarter, the casual restaurant company posted a negative earnings surprise of 16.67%. In fact, the company has missed/met the Zacks Consensus Estimate in three of the trailing four quarters, with an average miss of 0.42%.

The Habit Restaurants, Inc. Price and EPS Surprise

Let’s see what is in store this quarter.

Factors at Play

Habit Restaurants offers specialty sandwiches, fresh salads, shakes and malts. The third quarter marked the company’s 51st consecutive year-over-year growth in comps. The company expects its differentiated brand positioning, great operational execution, high quality Limited Time Offers, targeted digital strategies and innovative media partnerships to drive same-store sales growth in the to-be-reported quarter as well. Notably, per the third quarter conference call, management anticipates comps to grow approximately 2% in the fourth quarter.

Further, the company’s several successful marketing and culinary innovations, as well as a commitment to quality and value without the use of discounting to lure customers, should help in retaining brand loyalty and thereby increase comps.

Meanwhile, though the company is looking to expand its presence via new unit openings, an increase in expenses related to pre-opening costs and the development and management of new units may dent the quarter’s profits. Incremental investments in marketing programs and promotional activity as well as consistently higher labor expenses are also expected to weigh on margins. Moreover, a choppy sales environment in the overall restaurant space might limit revenue growth.

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 4 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Habit Restaurants holds a Zacks Rank #4 (Sell).

As it is 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 companies in the broader 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:

Staples, Inc. (NASDAQ:SPLS) has an Earnings ESP of +4.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Best Buy Co., Inc. (NYSE:BBY) has an Earnings ESP of +1.81% and a Zacks Rank #3.

Costco Wholesale Corporation (NASDAQ:COST) has an Earnings ESP of +0.74% and a Zacks Rank #3.

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