Chuck E. Cheese's mousy earnings

Steven Mallas — Thu, 21 Feb 2008 11:58:00 EST

Filed under: Earnings Reports, McDonald's (MCD), Yum Brands (YUM), Burger King Hldgs (BKC)

I was checking out some of the big stock gainers from Wednesday and came across CEC Entertainment (NYSE: CEC). Good ole Chuck E. Cheese's saw its stock rally more than 24%. I decided to check out the restaurant chain's earnings report to see if the quality of the numbers equaled the enthusiasm of the market.

Gee, some of the data look like cold, leftover slices of pizza to me. Same-store sales declined 2.7% and 1.4% for the fourth quarter and full fiscal year, respectively. Total revenue for the quarter was flat at approximately $175 million, and up only around 2% to $785 million for the year. CEC reported a loss of $0.02 per diluted share for the quarter; for the year, diluted earnings per share came out to $1.76, a number which compared unfavorably to the $2.04 per diluted share booked in 2006.

There were items affecting the GAAP scenario, but for me, the top-line picture seems quite bleak. Apparently Wall Street was enamored by CEC's outlook for 2008 earnings to fall somewhere in a range between $2.15 and $2.25 per share. If the company hits the high end of that guidance, I suppose the stock might look cheap. In addition, the free cash-flow statement showed that the green stuff rose 61% by management's calculation. So, yes, CEC should probably be looked at; however, I'm not inclined to put money to work here, especially after yesterday's run-up in the share price.

I haven't been in a Chuck E. Cheese's restaurant in many, many years. I'd like to visit one soon and see how things have changed. For now, though, I'll take a wait-and-see approach on CEC in terms of its stock. I mean, there are better restaurant brands out there, am I right? Companies like McDonald's (NYSE: MCD), Burger King (NYSE: BKC), and Yum! Brands (NYSE: YUM) would be stocks I'd look to first before CEC, at least at this time.

Chuck E. Cheese's mousy earnings originally appeared on BloggingStocks on Thu, 21 Feb 2008 11:58:00 EST. Please see our terms for use of feeds.

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Restaurant chain earnings giving indigestion

Kevin Kelly — Wed, 25 Jul 2007 07:50:00 EST

Filed under: Bad News, Columns, Chipotle Mexican Grill'A' (CMG), Stocks to Sell

I've held the anti-restaurant thesis for several weeks now, and I think the two reports after the bell yesterday validated the thoughts. Commodity costs are up, labor costs are increasing (and will to continue to increase) with the rise in the minimum wage, the increase in gas prices crunches the consumer's spending power, and so on.

CEC Entertainment (NYSE: CEC), the operator of Chuck E. Cheeses restaurants, reported earnings of 26 cents per share vs. expectations of 34 cents per share. In addition, same-store-sales fell 1.6% while operating costs rose 4%. Interestingly, the company attributed its poor performance not only to gas prices, but also popular new movie releases which drew its young-children demographic out of its restaurants and into movie theaters. If this wasn't enough, CEC cut its full year guidance to $1.96-$2.04 per share -- a rather significant difference from the analyst estimates of $2.26 per share before this report.

Similarly, Panera Bread (NASDAQ: PNRA) disappointed the street after the bell. As Beth Gaston Moon reported, the company's guidance for the coming quarter of 32-38 cents per share in EPS came in below prior analyst expectations of 43 cents. In addition, the company's guidance for the second half of the year of $.86-1.02 per share disappointed analysts who expected $1.12 per share.

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Restaurant chain earnings giving indigestion originally appeared on BloggingStocks on Wed, 25 Jul 2007 07:50:00 EST. Please see our terms for use of feeds.

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