Kura Sushi (KRUS) reports break-even results for Q3

Kura Sushi (KRUS) reported break-even quarterly earnings per share versus the Zacks Consensus Estimate of a loss of $0.06. This compares to earnings of $0.16 per share a year ago. The figure is adjusted for one-time items.

This quarterly report represents a 100% earnings surprise. A quarter ago, it was expected that the company would post a loss of $0.01 per share when in fact it posted a loss of $0.09, representing a surprise of -800%.

Over the last four quarters, the company has beaten consensus earnings per share estimates only once.

Kura Sushi, which belongs to the Zacks Retail – Restaurants industry, posted revenues of $63.08 million for the quarter ended May 2024, missing the Zacks Consensus Estimate by 0.03%. This compares to the prior-year revenues of $49.24 million. The company has topped the consensus revenue estimate only once over the last four quarters.

The sustainability of current share price movements based on recently released data and future earnings expectations will depend primarily on management’s commentary following the earnings conference call.

Year to date, Kura Sushi shares have lost about 18.5%, while the S&P 500 has gained 16.8%.

What’s next for Kura Sushi?

Even though Kura Sushi has underperformed the market this year, investors are wondering: what’s next for this stock?

There are no easy answers to this key question, but one reliable indicator that can help investors address this is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the coming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of its earnings release, the estimate revisions trend for Kura Sushi is unfavorable. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. As such, the stock is expected to underperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the upcoming quarters and current fiscal year change in the coming days. The current consensus EPS estimate is $0.19 on $67.47 million in revenue for the coming quarter and -$0.35 on $237.3 million in revenue for the current fiscal year.

Investors should be aware that the industry outlook can also have a significant impact on stock performance. In terms of the Zacks Industry Rank, Retail – Restaurants currently ranks in the bottom 40% of the 250+ Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Yum China Holdings (YUMC), another company in the same industry, has not yet released results for the quarter ending June 2024.

The China restaurant operator is expected to report quarterly earnings of $0.47 per share in its upcoming report, which would be unchanged from the year-ago quarter. The consensus EPS estimate for the quarter was unchanged over the past 30 days.

Yum China Holdings revenue is expected to be $2.77 billion, up 4.4% from the same quarter last year.

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