FAT Brands Inc. (FAT) Reports Q3 Loss, Lags Revenue Estimates

FAT Brands Inc. (FAT) reported a Q3 loss of $3.39 per share, significantly wider than the Zacks Consensus Estimate of a $2.43 loss and a year-ago loss of $2.74, representing a -39.51% earnings surprise. The company also missed revenue estimates, posting $140.01 million against a consensus, a 3.94% miss, and a decline from $143.37 million year-over-year. This marks the fourth consecutive quarter FAT has failed to surpass EPS estimates, contributing to a 71.4% year-to-date stock decline, and has resulted in a Zacks Rank #4 (Sell) amid an unfavorable industry outlook.

Analysis

FAT Brands Inc. (FAT) reported a significant Q3 loss of $3.39 per share, substantially wider than the Zacks Consensus Estimate of a $2.43 loss and the prior year's $2.74 loss, representing a -39.51% earnings surprise. Concurrently, the company missed revenue estimates, posting $140.01 million against a consensus, a 3.94% miss, and a decline from $143.37 million year-over-year. This marks the fourth consecutive quarter FAT has failed to surpass EPS estimates, indicating persistent operational challenges.

The company's shares have severely underperformed, losing 71.4% year-to-date compared to the S&P 500's 16.4% gain. This underperformance is compounded by an unfavorable earnings estimate revisions trend, which has resulted in a Zacks Rank #4 (Sell) for FAT, predicting near-term market underperformance. Current consensus estimates project a -$3.16 EPS on $138.5 million revenue for the coming quarter and -$12.67 EPS on $567.36 million revenue for the full fiscal year.

The broader Retail - Restaurants industry, to which FAT Brands belongs, is currently ranked in the bottom 13% of over 250 Zacks industries. This weak industry outlook, combined with FAT's consistent underperformance and negative sentiment, further exacerbates concerns regarding its fundamental trajectory and future prospects.

Key Decisions for Investors

• Investors should closely monitor management's commentary on the upcoming earnings call for any strategic shifts or operational improvements that could alter the current negative trajectory
• Given the consistent earnings misses, significant stock underperformance, and unfavorable industry outlook, investors should exercise extreme caution and consider reducing or avoiding exposure to FAT Brands
• Evaluate any subsequent changes in analyst earnings estimates following the report, as these revisions often correlate strongly with near-term stock price movements.