{
  "id": 16212418,
  "title": "Top restaurant stocks to watch, according to Raymond James",
  "url": "https://urgent.news/2026/10/23/top-restaurant-stocks-to-watch-according-to-raymond-james",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-23T18:14:24.000Z",
  "source": {
    "name": "Investing.com",
    "slug": "investing-com",
    "url": "https://www.investing.com/news/stock-market-news/top-restaurant-stocks-to-watch-according-to-raymond-james-4970217"
  },
  "original_language": "en",
  "account": "Raymond James has selected specific restaurant stocks as top investment ideas after the sector experienced notable underperformance in the third quarter, especially in September. This drop in performance is primarily due to significant capital inflows into AI and technology stocks, as well as macroeconomic and valuation challenges stemming from higher oil prices and interest rates.\n\nDespite these challenges, casual dining restaurants have shown resilience in the third quarter with better-than-expected comparable sales when compared to the second quarter, even after considering tough pre-pandemic comparisons from 2025. Limited service restaurants, on the other hand, have struggled due to food safety issues like cyclospora outbreaks and increased exposure to lower-income consumers, coupled with higher gasoline prices.\n\nCasual dining establishments seem to be benefiting from a more robust consumer base composed of middle and upper-income individuals, as well as stronger value perceptions in comparison to quick-service restaurants. Moreover, their social media strategies have proven more effective in attracting new customers, including younger demographics. Raymond James anticipates that investor interest will shift towards the positive trends observed in September and October. The firm believes that implementing new value promotions and messaging, particularly with the start of football season, could help maintain low single-digit percentage declines in the fourth quarter, which could then transition to flat or slightly positive performance in the first quarter.\n\nThe firm projects double-digit percentage unit growth in 2027, driven by strong franchisee returns with about two-year paybacks and accelerating international expansion. Raymond James has upgraded EAT to a Strong Buy from Outperform, predicting a strong beat and raise in earnings, with confidence in surpassing consensus estimates for 2027 earnings per share of $2.57. This is based on Chili's comparable sales increasing by 9%. The firm is raising its fiscal 2027 EPS estimates to $13.65, up from the current consensus of $13.26, and believes there are several factors that could sustain mid-single-digit percentage comparable sales growth through menu improvements, marketing efforts, and operational enhancements. The valuation appears appealing with a calendar year 2027 price-to-earnings ratio of around 15 times based on a 52-week average.\n\nRaymond James remains optimistic that third-quarter comparable sales and store margins will improve, leading to a resurgence in investor confidence. Additionally, spot ground beef prices have become deflationary recently, potentially providing some relief to margins in the second half of the year compared to current guidance. The firm highlights the low valuation, with an enterprise value to EBITDA of approximately 11 times on a 52-week basis, alongside the expectation of strong double-digit percentage unit growth and solid cash-on-cash returns of approximately 30%.",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}