Short Report: Cheeseburger Profits, 11/2

Thursday seems to be a day of corrections for major US equity indexes, with a mixed performance so far today. Recently lagging sectors like healthcare are catching up a bit today as investors take profits and rebalance their portfolios. Recent hot sectors like Consumer Staples are cooling, slightly.

Our Top Performers for Thursday’s session were dominated by short plays. Many current stocks have strong growth priced-in. Revenue growth coming in below expectations seems to trigger quick and dramatic selloffs in the current market environment, in particular.

Habit Restaurants Inc (HABT): down sharply after poor earnings news.

 Habit Restaurants, based in California, is a “fast-casual” burger and salad chain. They operate nearly 200 locations across 11 US states on the East and West Coasts. Their stock fell sharply after they announced Q3 financial results. It was down around 30% at the time of this writing. 

Total revenue increased 17.7% to $84.6 million, compared to $71.9 million in Q3 2016. Meanwhile, however, Company-operated comparable restaurant sales decreased 0.2% as compared to the third quarter of 2016. HABT insists it is still primed for growth, with expansion to the UK and Netherlands planned for the near future.

NewsQuantified once again beat some of the best market analysts in the world to the punch on this news item. We alerted our members of Habit’s earnings report yesterday evening. This morning, they have already been downgraded by some of the highest rated analysts in our system, such as Baird Capital (frequently featured in our Top Analyst reports). While they continue to grow, profit margins on a per store basis are relatively slim for HABT. Analysts expect the narrow margins to continue being enforced by fierce competitive pressures in the fast casual food marketplace.

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