3 Restaurant Stocks Likely to Beat Earnings This Week Although rising cases of the coronavirus now threaten to derail the turnaround in the restaurant industry, profits recorded for the three months ended...

A year ago, it would've been tough to convince anyone that a restaurant stock would be a good earnings play. My how the tables have turned. Literally.

With many restaurant chains welcoming back dining room customers, fuller tables are expected to lead to some more appetizing second-quarter results in 2021.

Although rising cases of the coronavirus now threaten to derail the turnaround in the restaurant industry, profits recorded for the three months ended in June are likely to be impressive.

Granted, with S&P 500 companies on pace for a record 88% earnings beat rate, predicting that any one company will top consensus expectations is far from a stretch. However, some of the more telling earnings beats could come from the likes of Yum! Brands, Restaurant Brands, and Bloomin' Brands.

Will Yum! Brands Top the Q2 Earnings Estimate?

Yum! Brands (NYSE:YUM) will report its second-quarter performance before the market open on July 29^th. Analysts are expecting earning per share (EPS) of $0.95 on revenue of approximately $1.5 billion. The bottom-line result points to 16% year-over-year growth but we may see profit growth reach at least 20%.

Last quarter the world's largest restaurant business delivered EPS of $1.07 that topped the Street by $0.20. Yum! Brands showed that it is firing on all cylinders as all three segments­—KFC, Pizza Hut, and Taco Bell—grew sales by at least 8%. At the same time, the overall operating margin expanded to 36.5%.

Much of the surge in profitability has to do with Yum! Brands' investments in technology. KFC now has a new online platform and similar digital enhancements are resonating well with Pizza Hut and Taco Bell customers. The company's delivery partnership with GrubHub and recent acquisition of online ordering and marketing tool Tictuk also bode well for connecting with the modern consumer.

Look for Yum! Brands to post a similar EPS figure to what it did last quarter. Although the magnitude of the beat may not be as impressive, it could send the stock to fresh record highs.

Is Restaurant Brands a Pre-Earnings Buy?

Restaurant Brands (NYSE:QSR), the parent company for Burger King and Tim Hortons quick-service restaurants (QSRs), is set to report pre-market on July 30^th. Earnings are expected to surge 85% from a weak prior-year period and revenue is forecast to be up 31% to around $1.4 million.

The $0.61 consensus estimate isn't likely to get crushed given the high visibility of the business, but Restaurant Brands could very well top expectations by 5% to 10%.

Last quarter the company beat EPS expectations by a nickel, or 10%, driven by strength at Burger King and Popeye's. Same store sales were down at Tim Hortons but improved dramatically from the previous quarter. And with more people returning to the office and venturing out of the home this Spring, longer drive through lines for coffee and Timbits could finally translate to positive comps.

With many people still hesitant to venture inside QSR locations, Restaurant Brands' focus on its drive-through business is paying dividends. It has set out to modernize the drive-through experience at more than 10,000 of its North American locations by this time next year. This includes the installation of digital screens with "predictive selling' technology and contactless payment options to drive higher sales and connect with safety-conscious customers.

In the days that followed Restaurant Brands' first-quarter report, the stock climbed to a pandemic era high above $70. With the stock now back in the mid $60's, look for a tasty Q2 earning beat to ignite a run back to the $70's.

Is Bloomin' Brands a Good Earnings Play?

Another restaurant stock that has pulled back is Bloomin' Brands (NASDAQ:BLMN). Now trading more than 20% below its all-time high of $32.81 set in April 2021, the operator of Outback Steakhouse and other casual dining spots is looking like a delicious earnings play.

History is likely to repeat itself here. Bloomin' Brands' first-quarter report in late April sent the stock to never-before-seen levels thanks to a 147% jump in U.S. digital sales and a significantly expanded operating margin. As dining rooms have opened, investments in off-premise sales outlets are serving up some nice multichannel growth that is likely to remain an essential strategy for casual dining chains.

Another clue that the second-quarter numbers will be strong came directly from management during the first-quarter report. It noted that for the four weeks ended April 25^th, 2021, comparable U.S. sales were up 12.6% from 2019 levels.

It, therefore, doesn't make sense for Bloomin's brands stock to trend lower ahead of what's probably going to be a very good second-quarter report. Investors looking for reassurance that the economic recovery is alive and well—and for a compelling earnings play—should bite into the bloomin' onion.