What happened

Shares of The Habit Restaurants (NASDAQ:HABT) were catching fire today after the fast-casual chain posted strong results in its third-quarter earnings report. The stock was up 15.5% as of 1:27 p.m. EDT on Thursday.

So what 

Comparable-restaurant sales at the burger chain rose 3.1%, marking its sixth consecutive quarter of comps growth, and overall revenue increased 12.2% to $117.3 million, topping estimates at $116.2 million. Comps benefited from a price increase of about 5% that the company imposed in May to counter rising wages. Traffic in the quarter fell 2.7%, but the average ticket rose 5.8%.  

A meal including a burger, fries, and a drink from with the Habit logo on a tray

Image source: Habit Restaurants.

The company appears to be seeing results from its efforts to increase convenience by adding drive-thrus and in-store order kiosks, and promoting use of its mobile app. On the bottom line, adjusted earnings per share ticked up by a penny from $0.05 to $0.06, which easily beat analyst expectations at $0.01.

CEO Russ Bendel called the results "strong," and added, "We also continued to make progress on our mission to be a total-access brand to our customers." 

Now what 

Management raised the bottom end of its full-year guidance slightly. It now sees revenue of $463 million to $465 million, up from a prior range of $462 million to $465 million, while it expects comps growth of 3% to 3.5%, compared with an earlier forecast of 2.5% to 3.5%. It did not give profit guidance.

The stock has largely been a disappointment since its 2014 IPO as shares are still down significantly from then, but enthusiasm seems to be building for opportunities in digital and delivery. Management said that digital sales through its own platforms grew 25%, and the company recently added Uber Eats as a delivery partner.

Restaurant stocks like Chipotle and Shake Shack have surged this year on strong digital sales growth, so the potential would seem to be there for The Habit to do the same. Whether the company can capitalize on that opportunity remains to be seen.

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