Meritage Hospitality Group Struggles with Quarterly Loss Amid Revenue Decline
Quarterly Financial Performance Falls Short of Expectations
Meritage Hospitality Group Inc. (MHGU) reported a quarterly loss of $0.34 per share, falling short of the Zacks Consensus Estimate of $0.49. This loss is a worrisome increase compared to a loss of $0.09 per share from the same quarter last year, with adjustments made for non-recurring items.
This report marks a significant earnings surprise of -169.39%. Last quarter, expectations were higher, with anticipated earnings of $0.37 per share, but the company only delivered $0.33, resulting in a surprise of -10.81%.
Challenging Revenue Landscape
Over the last four quarters, Meritage has consistently missed consensus EPS estimates. For the quarter ending September 2024, the company reported revenues of $164.85 million, which was 9.17% below the Zacks Consensus Estimate. This also represents a decline from last year’s revenues of $170.32 million. Despite these challenges, Meritage has exceeded consensus revenue estimates twice in the past year.
The outlook for Meritage’s stock will heavily depend on management’s comments during the upcoming earnings call and how it navigates its path forward.
Since the start of the year, Meritage Hospitality Group shares have dropped approximately 21%, contrasting sharply with the S&P 500’s gain of 20.1%.
What Lies Ahead for Investors?
Given Meritage’s recent underperformance, many investors are left wondering about the future of the stock. It’s a complex question, but the company’s earnings outlook can provide some insights. This outlook encompasses both the current consensus earnings expectations for upcoming quarters and any recent adjustments to these expectations.
Research indicates a strong link between short-term stock movements and trends in earnings estimate revisions. Investors can monitor these changes through tools like the Zacks Rank, which is well-regarded for leveraging earnings estimate revisions.
Leading up to this earnings release, the trend in estimate revisions has been mixed for Meritage Hospitality Group. This has resulted in a Zacks Rank #3 (Hold) designation. Consequently, shares are expected to perform in line with the market in the near future. Analysts will be watching closely to see how estimates for upcoming quarters evolve.
The current consensus EPS estimate stands at $0.38, with projected revenues of $174.8 million for the next quarter, and an EPS of $1.40 on total revenues of $691.2 million for the current fiscal year.
Additionally, it’s essential to recognize how industry outlooks can affect stock performance. The Zacks Industry Rank places Retail – Restaurants in the top 32% of over 250 Zacks industries, suggesting a favorable environment as the top half of Zacks-ranked industries significantly outperforms the bottom half.
Dutch Bros Set to Release Earnings
In the same industry, Dutch Bros (BROS) has yet to release its financial results for the quarter ending September 2024, with the report scheduled for November 6. The drive-thru coffee chain is anticipated to report quarterly earnings of $0.12 per share, reflecting a year-over-year decline of 14.3%. However, the consensus EPS estimate has remained unchanged over the past month.
Revenue projections for Dutch Bros are promising, expected to reach $324.45 million, marking a 22.7% increase from the previous year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
