RBC flags earnings upside at Chipotle, Burger King parent and Jersey Mike’s

RBC Capital Markets sees potential for stronger comparable sales at Chipotle Mexican Grill, Restaurant Brands International and Jersey Mike's Subs as the restaurant operators prepare to report quarterly results, with promotional activity and digital engagement among the potential growth drivers. 

Chipotle is one of RBC's preferred earnings ideas, with the bank expecting third- and fourth-quarter comparable sales growth to exceed market expectations. RBC considers consensus estimates conservative and pointed to the stock's recent underperformance as another factor supporting its view.

Restaurant Brands International could benefit from stronger same-store sales at Tim Hortons, RBC said, citing a Harry Potter collaboration and a broadly stable macroeconomic environment compared with the previous quarter.

RBC also expects potential for stronger same-store sales at Jersey Mike's Subs, supported by limited-time offers and digital momentum.

The bank's outlook was more measured for other companies on its earnings calendar. Starbucks is expected to deliver another solid quarter, although RBC said the result is largely anticipated by the market. Life Time is expected to beat earnings expectations and raise its outlook, but RBC sees no obvious near-term catalyst for a significant share-price revaluation.

RBC was more cautious on Wingstop, citing the restaurant chain's exposure to consumers sensitive to elevated gasoline prices, which could constrain discretionary spending.

The research highlights how company-specific sales drivers and consumer spending pressures could separate restaurant-sector performers during the reporting season.