Premium NoBull Posts
What is the Federal Government’s Job?
A couple of weeks ago we conducted a thought experiment in which the government became a nonprofit, and this week we propose another thought experiment in which the government becomes a public corporation. We suggest that this could provide very useful input into the debt ceiling debate.
Beyond Meat Struggles to Keep Its Head Above Water
Customers are left with a level of ambiguity regarding the health benefits & value of Beyond Meat’s products, and management did not think it did enough to stand out in an increasingly crowded market.
Walmart Posts Strong 1Q24 Results Despite Consumer Struggles
On a 2-year stack basis, food inflation remains over +20% and continues to pressure discretionary wallets. If a customer is living paycheck to paycheck, they now have a 2-year stack that’s a problem which eventually becomes a 3-year stack problem.
Tyson Foods Fiscal 2Q23 Adjusted EBITDA -37% Y/Y
Tyson’s management reported a highly unusual situation in which all 3 of its core protein categories (beef, pork & chicken) were simultaneously experiencing market challenges.
Dollar Tree Reports Lower Government Benefits Affecting Consumers
Low-income consumers are pressured by lower SNAP benefits & tax refunds, higher inflation & the elimination of covid stimulus from the system. The consumer is now more focused on needs vs. wants.
The Importance of the Balance Sheet in Financial Analysis
While most investors are focused on sales growth & margins, they would be well served to further consider the strength of a company’s balance sheet. We look at BlackRock’s financial condition as an illustrative point.
The Importance of Free Cash Flow in Financial Analysis
Cash represents the lifeblood of all business enterprises which is why it is important to analyze free cash flow which we define as operating cash flow minus capex, dividends, and stock buybacks. We illustrate DoorDash as an example of why cash flow analysis is so important.
Lessons From Tucker Carlson
There are many theories about why Fox booted Tucker Carlson, but it may be a very simple reason which can instruct everyone involved in the consumer retail segment.
It is Imperative that Climate Change Regs Incorporate Economic Reality
This week we spotlight efforts by international agencies to lower the earth’s temperature by imposing onerous regulations on energy producers. We suggest it will be better to: begin a process of implementing continuous improvements designed to support both economic & climate progress; and use international organizations to share tech & best practices as opposed to providing them with regulatory powers best left to individual nation-states.
AutoZone Fiscal 3Q23 Reveals Consumers are Holding on to Cars Longer
Both the new & used car markets are posing significant challenges for its customers & AutoZone expects these markets to remain challenged for a longer period of time than originally assumed, providing a tailwind for its DIY business.
Premium RR Posts
Jack in the Box’s Fiscal 2Q23 3-Year Comps Up +29.3%
Full-year FY23 comp guidance was raised to mid-to-high single digits up from low single digits. Increasing operating & dining room hours provide a sales tailwind for the system.
RR 2023 Wendy’s Report
While Wendy’s has done well to magnify its significant menu prowess sufficient to generate a respectable +18% cumulative U.S. comp growth from 2019 – 2022, the chain must continue to work to translate its QSR+ positioning into increased frequency from a higher income demo sufficient to drive a higher check and store level profits.
RR 2023 IHOP Report
IHOP is well positioned as the largest player in the $1B+ family chain segment with 30% market share and the largest marketing budget in the segment. The chain is well known for: an unexpected twist on “all things breakfast, any time of the day”; world famous pancakes; flavored syrups; and the never empty coffee pot.
Overview of Darden’s Proposed Acquisition of Ruth’s Hospitality Group
Consumers with $150k+ income levels continue to dine out, and this demo expects to maintain or increase their spending at casual or fine-dining restaurants.
Texas Roadhouse’s 1Q23 Average Weekly Sales Increased +12.5% Y/Y
While strong traffic trends reveal customer acceptance of the chain’s pricing, new guests coming into Texas Roadhouse are starting on the value side of the menu and management reports a little bit of trade-down. In any case, its mix is still extremely positive relative to pre-covid levels.
Burger King’s Largest Franchisee Reports Strong 1Q23 Results
1Q23 comps increased +11.7% y/y (+9.7% price, +3.3% mix & -1.1% traffic), helped by a 7% reduction in discount mix & late-night traffic strength. The best 1Q restaurant-level adjusted EBITDA margin in 5 years (12.2%) reflected strong sales, moderating inflation & improved operational efficiencies.
Wendy’s 1Q23 System Comps Increased +7.2% Y/Y
Wendy’s reported that net disposable income is a big driver of restaurant sales & noted that decreasing grocery price inflation should drive net disposable income higher. Also, while traffic is flat for the under $75k consumer, traffic is growing for the over $75k demo.
Chili’s Fiscal 3Q23 Comps Increased +9.1% Y/Y
The brand goal is to drive sales by eliminating aggressive promotions while increasing pricing & premium trade-up opportunities sufficient to invest in marketing & operations.
RR Report McDonald’s 2023
While McDonald’s is well positioned for the long-term with solid execution around sound fundamentals, the current macro environment may prompt its core value-oriented customers to demand more deals and concessions than the system is prepared for.
Burger King 1Q23: Employment is the Biggest Driver of Industry Traffic & Sales
While a +1% price increase typically drives a -0.4% traffic loss (60% flow-through), BK’s A&B operators are generating significantly higher flow-through rates, revealing that guests are willing to pay more when provided with a great experience.
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