The local restaurant where we ate last night for a birthday celebration was fairly well packed, and it's a very small space where tables are extremely close together. There was no hint of the virus fear that is gripping markets and certain areas of the country. Of course, this is eastern Pennsylvania, and there are no confirmed coronavirus cases in the state at this point.
However, yesterday, markets were brutal for restaurant names, especially for dine-in names. Damage was intense for Red Robin (RRGB) (-21%), Applebees and IHOP parent Dine Brands Global (DIN) (-13%), Cheesecake Factory (CAKE) (-12%), Brinker (EAT) (-10%), Bloomin' Brands (BLMN) (-8%), and Cracker Barrell (CBRL) (-7%).
Not surprisingly, fast food, and takeout related names such as Chipotle (CMG) (-5%), McDonald's (MCD) (-4%), Papa John's (PZZA) (-4%), and Wendy's (WEN) (-4%) fared better than their casual dining cousins. Meanwhile, home delivery name Blue Apron (APRN) , which has been in a downward slide, and does not appear to be viable for the long haul, rose 14%. I'd only ever imagined the company being saved via acquisition by an entity with much deeper pockets, and certainly not by a virus.
The slide in cruise line names continues: Royal Caribbean (RCL) (-16%), Carnival (CCL) (-14%), and Norwegian (-13%) (NCLH) all had awful days on Thursday, in reaction to news that a CCL Princess line ship was diverted to Mexico following the death of a passenger who had been on an earlier sailing.
RCL is now down more than 50% since January and yields 4.74%. It's similar for NCLH, which was a $60 stock in January, and closed Thursday at $29.59, while CCL's dividend yield has been pushed to a whopping 7.2%.
Current year earnings estimates have come down a bit over the past month; RCL's consensus for 2020 has fallen from $10.43 to $10.13, CCL's from $4.53 to $4.33, while NCLH has so far suffered the largest hit, with the consensus falling from $5.57 to $4.44, but further changes are likely for all three.
I am very intrigued by RCL, which trades at about 5.5x next year's consensus estimates (again, a potentially transient number), but will not pounce at this point. The virus itself is not the problem, it's consumer's fear of the virus that will dictate where things move from here. If regular cruise goers are convinced that being on a ship will increase their virus risks, if they stop booking, or cancel upcoming cruises, the "bottom" may be far from here.
Fear is the name of the game here, not reality, and until it abates, all bets are off.
