Tuesday, Stifel reduced its price target on Chuy's Holdings (NASDAQ:CHUY) to $32 from $36 while keeping a Hold rating on the shares.
The adjustment follows Chuy's reported earnings per share (EPS) of $0.42, which surpassed both Stifel's and the consensus estimate of $0.36. Despite the earnings beat, Chuy's experienced a same-restaurant sales (SRS) decline of 5.2%, which was steeper than Stifel's forecasted 4.0% drop and the consensus estimate of a 3.6% decrease.
Chuy's Holdings demonstrated resilience with a solid restaurant margin performance of 18.8%, outpacing Stifel's expectation of 18.2% and the consensus estimate of 18.1%. However, quarter-to-date comparable sales were reported to be down by 2.2%. The company has reiterated its EPS guidance for the year, projecting between $1.82 and $1.87.
This outlook is based on the anticipation of improved trends in the second half of 2024 as challenges from the previous year subside, new off-premise initiatives take hold, and new menu items pique customer interest.
The firm remains committed to its expansion plan, aiming to accelerate unit development with 6-8 new restaurant openings in 2024. Management's confidence is also underscored by their expectation to achieve a 10% growth rate in 2025, with a significant portion of this growth projected to come from the company's core markets.
In light of the softer near-term comparable sales trends, Stifel has revised its 2024 EPS estimate for Chuy's Holdings to $1.85, a slight decrease from the previous estimate of $1.87.
The new 12-month price target of $32 reflects adjustments for a higher risk-free rate, according to the firm's analysis.
InvestingPro Insights
Recent InvestingPro data sheds light on the financial health and market sentiment surrounding Chuy's Holdings (NASDAQ:CHUY). The company boasts a market capitalization of $490.2 million and is trading at a P/E ratio of 16.52, which adjusts to an even more attractive 14.89 when considering the last twelve months as of Q1 2024. This, along with a PEG ratio of 0.46 during the same period, suggests that Chuy's may be trading at a low price relative to its near-term earnings growth potential.
InvestingPro Tips indicate that management has been bullish on the company, engaging in aggressive share buybacks. This is often a sign of management's belief in the company's value and future prospects. Additionally, despite some analysts revising their earnings downwards for the upcoming period, Chuy's Holdings has been profitable over the last twelve months and is predicted to remain profitable this year. Moreover, the company's liquid assets exceed short-term obligations, which is a positive indicator of financial stability.
For investors seeking a more comprehensive analysis, InvestingPro offers additional insights, with a total of 9 more InvestingPro Tips available for Chuy's Holdings. These can be accessed by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which could provide a deeper understanding of the company's financial position and market performance.
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