The Word on the Street: What Analysts Are Recommending for Fast-Food and Pizza Companies after 1Q16

Share prices generally move in tandem with analyst recommendations. As analysts raise their next-12-month target prices, share prices may also increase, and vice versa.

In this final part of our series, we’ll discuss analysts’ revised estimates and recommendations for fast-food and pizza companies following their 1Q16 results.

From the above table, we should note that Jack in the Box (JACK), Papa John’s (PZZA), and Restaurant Brands International (QSR) are the most favored stocks in our group of eight, with no analyst recommending a “sell” for the stock of these companies. Of the three, JACK has the highest number of “buy” recommendations at 63%, while PZZA and QSR received 50% and 31% of “buy” recommendations, respectively.

By comparison, Wendy’s (WEN) had 50% of analysts recommending a “buy, with only 5% recommending a “sell.” YUM! Brands (YUM) and Sonic (SONC) appear to be the least favored in our group, with 7% of analysts recommending “sells,” followed by Domino’s Pizza (DPZ) and McDonald’s (MCD), with 6% of analysts recommending “sells.”

Analysts expect SONC and WEN to reach $37.2 and $11.9 within the next 12 months. This would represent a return potential of 24% and 18%, respectively.

During the same period, analysts are expecting QSR to return 9%, while PZZA and DPZ are expected to return 5%. YUM and JACK are expected to provide the smallest returns of 4% during the next 12 months. Notably, JACK makes up 0.18% of the holdings of the PowerShares FTSE RAFI US 1500 Small-Mid Portfolio ETF (PRFZ).

In the end, we should note that a share price that is lower than a stock’s target price doesn’t necessarily mean that the stock is an automatic “buy.” Before investing, investors should carefully analyze the various metrics that we’ve discussed in this series—and keep checking in with Market Realist’s Restaurants page.