The restaurant industry continues to navigate a dynamic environment shaped by digital transformation, shifting consumer preferences and economic headwinds. Companies in the broader Retail-Wholesale sector, such as Shake Shack Inc. SHAK, BJ's Restaurants, Inc. BJRI and Texas Roadhouse, Inc. TXRH, are set to report their fourth-quarter earnings on Feb. 20.

See the Zacks Earnings Calendar to stay ahead of market-making news.

The restaurant industry is likely to have experienced notable gains from marketing initiatives, service digitization, new store openings and menu offerings. Also, strategic investments in staffing and deployment, processes and algorithm technology bode well. Industry players are piloting a new in-store prioritization algorithm and exploring other technology investments to improve order sequencing and efficiency behind the counter. Also, refinement of pricing strategies and identification of key category pricing thresholds are likely to have positioned the respective company at the top of the consumer's consideration, thereby aiding its top line.

However, companies continue to navigate several macroeconomic challenges that have influenced their performance. Global economic uncertainties, including shifts in consumer sentiment, are likely to have weighed on companies’ performance, particularly in regions affected by geopolitical conflicts. Pressure on spending persists, in particular, with two significant cohorts of consumer base, low-income and families, particularly in Europe. Additionally, fluctuations in foreign exchange rates remain headwinds.

Per the latest Earnings Outlook, total earnings of the Zacks Retail-Wholesale sector are expected to rise 23.6% year over year. In the third quarter of 2024, the sector’s earnings were up 17% year over year. Meanwhile, revenues for the sector are expected to rise 4.6% year over year. In the previous quarter, the sector’s revenues gained 5% year over year.

Sneak Peek Into Upcoming Earnings Releases

Amid a number of stocks, to identify those with the potential to beat earnings estimates, the following Zacks methodology can be exercised. The Zacks model suggests that a company needs to have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Here are three bundled stocks that are set to report their fourth-quarter earnings.

BJ's Restaurants is scheduled to report results after the closing bell.

BJ's Restaurants, Inc. Price and EPS Surprise

BJ's Restaurants, Inc. price-eps-surprise | BJ's Restaurants, Inc. Quote

The company’s fourth-quarter performance is likely to have benefited from solid Pizookie Meal Deal performance and loyalty program membership expansion. Also, higher guest traffic and average checks, resulting from menu price increases, changes in mix and a higher level of promotions are likely to have added to the positives. Cost-saving and margin expansion plans bode well.

The company rolled out a specialized disposables distributor, for which it will begin to realize the full savings in the fourth quarter of 2024. However, increased food cost inflation and other related expenses like labor and benefits, along with uncertainty regarding discretionary spending, are likely to have negatively impacted the company’s fourth-quarter bottom line.

The Zacks Consensus Estimate for BJRI’s fourth-quarter 2024 revenues and earnings per share (EPS) is pegged at $337.4 million and 35 cents, indicating growth of 4.3% and 2.9%, respectively, from the year-ago figures.

The company has an Earnings ESP of -2.06% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shake Shack is scheduled to report results before the opening bell.

Shake Shack, Inc. Price and EPS Surprise

Shake Shack, Inc. price-eps-surprise | Shake Shack, Inc. Quote

SHAK’s fourth-quarter performance is likely to have benefited from robust same-shack sales, digital initiatives and unit expansion. Also, the emphasis on innovative menu offerings, targeted promotions and expanded digital bodes well. In the first nine months of 2024, same-shack sales rose 3.4% year over year, driven by a 4.2% increase in price mix. It has also been making more investments in digitization to sustain its digital guest enhancement strategies.

The company’s efforts to enhance guest engagement and brand visibility through effective marketing strategies are likely to have supported its performance in the fourth quarter. However, challenges with respect to rising beef costs and macroeconomic and geopolitical issues in licensed markets like China and the Middle East are likely to act as a headwind.

The Zacks Consensus Estimate for SHAK’s fourth-quarter 2024 revenues and EPS is pegged at $328.6 million and 25 cents, indicating growth of 14.8% and 1,150%, respectively, from the year-ago figures.

The company has an Earnings ESP of -0.29% and a Zacks Rank #2.

Texas Roadhouse is scheduled to report results after the closing bell.

Texas Roadhouse, Inc. Price and EPS Surprise

Texas Roadhouse, Inc. price-eps-surprise | Texas Roadhouse, Inc. Quote

TXRH is expected to maintain strong revenue growth in the fourth quarter, supported by continued positive traffic trends. The company reported an 8.3% same-store sales increase in the first four weeks of the fourth quarter, reflecting sustained demand across its restaurants. This momentum follows an 8.5% comparable sales gain in the third quarter, driven by a mix of traffic growth and pricing adjustments.

The additional 14th week in the fourth quarter (due to TXRH’s 53-week fiscal year) is expected to boost overall revenues. Emphasis on the rollout of new menus, store expansions and digital initiatives is likely to have aided the company’s performance in the to-be-reported quarter. However, commodity and labor inflation are likely to have hurt the bottom line in the fourth quarter.

The Zacks Consensus Estimate for TXRH’s fourth-quarter 2024 revenues and EPS is pegged at $1.42 billion and $1.66, indicating growth of 21.6% and 53.7%, respectively, from the year-ago figures.

The company has an Earnings ESP of -0.86% and a Zacks Rank #2.

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