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Unpacking Q3 Earnings: The ONE Group (NASDAQ:STKS) In The Context Of Other Sit-Down Dining Stocks

By: StockStory

November 27, 2024 at 03:12 AM EST

STKS Cover Image

Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at The ONE Group (NASDAQ: STKS) and its peers.

Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.

The 12 sit-down dining stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 0.9%.

In light of this news, share prices of the companies have held steady as they are up 2.8% on average since the latest earnings results.

The ONE Group (NASDAQ: STKS)

Doubling as a hospitality services provider for hotels and resorts, The One Group Hospitality (NASDAQ: STKS) is an upscale restaurant company that operates STK Steakhouse and Kona Grill.

The ONE Group reported revenues of $194 million, up 152% year on year. This print fell short of analysts’ expectations by 10%. Overall, it was a softer quarter for the company with full-year revenue guidance missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.

“With the addition of Benihana and RA Sushi, we increased our revenue $117 million to a record $194 million as we continue to grow a scalable platform with exciting VIBE and entertainment centric dining brands. During the quarter, I was encouraged by our team’s ability to manage costs effectively. Operating profit growth exceeded revenue growth as we improved year-over-year margins at Benihana through supply chain synergies, benefitted from their higher margin contribution, and exhibited tight cost management within our preexisting business. Within the last sixty days we opened three Company-owned locations, all of which are off to terrific starts,” said Emanuel “Manny” Hilario, President and Chief Executive Officer.

The ONE Group achieved the fastest revenue growth but had the weakest performance against analyst estimates of the whole group. Still, the market seems discontent with the results. The stock is down 29.1% since reporting and currently trades at $3.37.

Read our full report on The ONE Group here, it’s free.

Best Q3: Brinker International (NYSE: EAT)

Founded by Norman Brinker in Dallas, Texas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates under the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.

Brinker International reported revenues of $1.14 billion, up 12.5% year on year, outperforming analysts’ expectations by 3.4%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ same-store sales estimates.

Brinker International pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 29.1% since reporting. It currently trades at $125.50.

Is now the time to buy Brinker International? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: Denny's (NASDAQ: DENN)

Open around the clock, Denny’s (NASDAQ: DENN) is a chain of diner restaurants serving breakfast and traditional American fare.

Denny's reported revenues of $111.8 million, down 2.1% year on year, falling short of analysts’ expectations by 3.2%. It was a softer quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.

As expected, the stock is down 5.7% since the results and currently trades at $6.25.

Read our full analysis of Denny’s results here.

Dine Brands (NYSE: DIN)

Operating a franchise model, Dine Brands (NYSE: DIN) is a casual restaurant chain that owns the Applebee’s and IHOP banners.

Dine Brands reported revenues of $195 million, down 3.7% year on year. This print lagged analysts' expectations by 1.7%. Aside from that, it was a mixed quarter as it also logged an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ same-store sales estimates.

The stock is up 9.1% since reporting and currently trades at $33.98.

Read our full, actionable report on Dine Brands here, it’s free.

Red Robin (NASDAQ: RRGB)

Known for its bottomless steak fries, Red Robin (NASDAQ: RRGB) is a chain of casual restaurants specializing in burgers and general American fare.

Red Robin reported revenues of $274.6 million, down 1.1% year on year. This print topped analysts’ expectations by 1.4%. Zooming out, it was a softer quarter as it produced full-year EBITDA guidance missing analysts’ expectations significantly.

The stock is down 17% since reporting and currently trades at $5.10.

Read our full, actionable report on Red Robin here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September, a quarter in November) have kept 2024 stock markets frothy, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there's still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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