Comparing Fast Casual Restaurants’ 1Q16 Earnings Growth



EPS growth

After discussing revenue growth and EBIT (earnings before interest and tax) margins, let’s discuss the EPS growth of the seven fast casual restaurants under review. In 1Q16, these seven companies registered median EPS growth of 10.6%.

Comp: Comparing Fast Casual Restaurants EPS Growth in 1Q16

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The leaders

Shake Shack (SHAK) beat out the other six companies in terms of EPS growth. SHAK posted EPS growth of 100%, from $0.04 in 1Q15 to $0.08 in 1Q16. Revenue growth and margin expansion drove SHAK’s EPS in 1Q16.

SHAK was followed by Potbelly (PBPB) with EPS of 33.3%. During the same period, Habit Grill (HABT) and Panera Bread (PNRA) posted EPS rises of 11.1% and 10.6%, respectively. PNRA, which forms 0.71% of the holdings of the iShares S&P Mid-Cap 400 Growth ETF (IJK), has repurchased shares worth $500 million in the last 12 months, which has contributed toward the growth in its 1Q16 EPS.

The laggards

Falls in revenue and margins led Chipotle Mexican Grill (CMG) to report an earnings loss for the first time in the company’s history. CMG posted EPS of -$0.84 in 1Q16 compared to $3.9 in 1Q15. CMG was followed by Noodles & Company (NDLS), which also posted EPS of -$0.06, a fall of 300% from $0.03 in 1Q15.

A fall in margins due to increased labor expenses and marketing initiatives led to a fall in NDLS’s EPS. Fiesta Restaurant Group’s (FRGI) EPS also fell by 5.1% from $0.39 to $0.37. A rise in promotional costs and discounts caused FRGI’s margins to fall, which lowered its EPS in 1Q16.


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