2 Restaurant Stocks to Look Out For

The restaurant industry had a lackluster start to 2016. Lower consumption over the last quarter is a concern for restaurants that have experienced headwinds as labor costs rise and China’s economy lowered international sales. Traffic at many restaurants has also dipped, causing concerns.

Two restaurant stock outlooks to focus on in May include:

Restaurant Stocks

1.     McDonald’s Corp (MCD)

McDonald’s surprised investors with better-than-expected revenue and earnings in the first quarter. The company has fared well due to its innovative product offerings, which include using fresh beef for its hamburgers, offering all-day breakfast and offering garlic fries to appeal to more consumers.

The company’s stock took a hit on Friday following the release of Shake Shack’s earnings.

McDonald’s operates a total of 36,000 stores and posted an EPS of $1.23 per share on revenue of $5.90 billion in the first quarter. CEO Steve Easterbrook stated, “I’m pleased to report that our turnaround is taking hold.” The company beat expectations of $1.16 EPS on $5.83 billion in revenue.

McDonald’s has worked diligently to turn its sales around, and 2016 looks like a strong year for the company as of May 2016.

2.     Shake Shack Inc. (SHAK)

Shake Shack has rallied investors and done everything right. Analysts believe the company is the McDonalds of the future, and its stock rallied 9% last week as a result. The company is having a favorable year, with same-store sales growth of 9.9%.

A rise in traffic led to the growth and attributed to 7.3% of same-store sales growth. Pricing increases accounted for 1.5% growth.

Warm weather was also a factor in the company’s growth. The chain posted revenue growth of 43.3% year over year, with Q1 revenue of $54.2 million and an EPS of $0.08. Analysts projected $52.2 million in revenue growth and an EPS of $0.05.

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Daniel Simmons