NoBull Posts
Noblesse Oblige for the Masses
A healthy society is marked both by a reasonable distribution of wealth along with an investment focus on productive assets that can help all of society. An unhealthy society is marked by a concentration of wealth in the hands of a few who are focused on preserving their ability to purchase self-indulgent pleasures.
Potential New Home Buyers Seem to be Conserving Cash for Necessities
KB Home’s 4Q22 results exemplify the impact of depressed consumer confidence levels as evidenced by a sharp pull-back of potential new home orders from first-time buyers that largely have the financial means to complete the transactions (even with elevated mortgage rates). While KB is working hard not to discount its inventory to drive 1Q23 sales, this pullback certainly will have mid-term implications if confidence levels don’t begin to rebound soon.
Performance Food Group (PFG) Investor Presentation – January 2023
For some time, the market has been held captive to the Fed’s interest rate hikes and prospects about future actions to fight runaway inflation. Further, the Fed has been telling us that labor costs represent the main inflation culprit. However, comments from a recent PFG investor presentation reveal that the real cause of labor inflation is not something that interest rate hikes can solve.
Small Businesses Are the Lifeblood of Economic Growth
Policymakers need to protect and encourage small businesses because of the critical role they play in driving growth during tough economic times. While consolidation may sustain margins and large companies during downturns, the economy needs to grow its way out of our current problems.
Record Inflation Plunges Consumer Confidence
The consumer confidence level has fallen to levels below the 2009 Great Recession, and shockingly, far below the 2020 covid lockdown levels. This certainly has implications for future GDP performance.
Slowing Employment Prospects Suggests Room for a Pause in Rate Hikes
A softening labor market is evident in declining new hires & increasing layoffs. Hopefully, the Fed notices the beginning of its mandate to attack inflation by lowering labor costs.
Are We in an Earnings Recession?
Recessions are typically defined by macroeconomic metrics like GDP & unemployment, data that relates to consumers. However, little attention has been dedicated to analyzing whether we are in a corporate profit recession. Fortunately, Corporate America is in pretty good shape – at least through 3Q22.
Darden Doing Swell Without Discount Seekers
Management reported: a spending shift from durable household goods to leisure services, benefitting the restaurant industry; the high-end consumer is doing well & while <$50k consumers have been a little soft over the last 6 months, Darden’s mix from this demo is still above pre-covid levels; and as the <$50,000 demo includes singles & retirees living in multigenerational households, lower-income consumers are in better shape than they appear.
NY Fed’s Predictive GDP Forecast Index Has Been Steadily Declining to Current 1.42% Level
Economic activity is slowing dramatically according to the WEI index, trending towards a recession.
How to Improve Your Odds in the Biggest Casino on Earth
While stock investments can be very lucrative over the very long-term, everything depends on the timing of your exit. Also, success depends on your ability to stand steady when the sky is falling all around you. Of course, past averages do not guarantee future performance…
RR Posts
Dashboard: Unit Level
Despite healthy comp growth prospects, unit-level P&Ls remain pressured by substantial food cost inflation (and labor inflation to a lesser extent).
Dashboard: Capital Markets
Restaurant stocks had a good month in November as the market considers a soft landing for the economy.
3Q Investor Calls & Same Store Sales
Total restaurant industry sales growth of +11.2% outperformed food at home (grocery) sales growth of +8.1% during 3Q which at least partially reflects significantly higher food at home CPI (+13.2% vs. +8.0% food away from home).
Wingstop 2022
While Wingstop enjoys strong positioning and adept execution around an extremely popular menu item (propelling the chain into the big league), its progress is dependent on mitigating volatile wing costs which is key given the brand’s orientation towards a lower-income demo in a challenging macro environment.
Hardee’s 2022
While Hardee’s has improved its relevancy around its brand positioning, the need to strengthen its value positioning may still be required to drive its top and bottom lines.
Menu & Promotions 2022
Menu & Promotions report provides data for 58 chains including total menu items, promotional mix, new product, average check, daypart and off-premise mix.
Dashboard: Unit Level
Unit-level performance is stronger than expected given inflationary pressures.
Dashboard: Capital Markets
Restaurant stocks reveal improving fundamentals, but there remains some major hurdles to overcome.
Buffalo Wild Wings 2022
BWW is famous for its wings flavored with 24 sauces & seasonings in ascending order of heat and enjoys considerable brand equity as the largest and perhaps most iconic sports bar chain with a positioning that currently benefits from manageable wing prices.
Dashboard: Unit Level
Improving sales and peak inflation offers hope for the future.
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