Overall Score:0
Trading Chart: 0
Analyst Opinion: 0
| Strong Buy | 5 | |
| Buy | 5 | |
| Hold | 17 | |
| Underperform | 1 | |
| Strong Sell | 0 | |
Insiders: 1
Director Simon persistent buyer
Management Discussion and Analysis: 0
Government and Health Safety Risk is High
Comp sales rose 2% driven by increased traffic, and higher average checks which included pricing increases
Cost of sales increased 60bps to 25.5% due to higher dairy and grocery prices
International Expansion risk (22 stores over 5 years) which is concentrated in the MENA region
170 total restaurants, 11 new expected in 2012, 3 internationally
Sales / sq ft have been $864, $850, 830 in 2011, 2010, 2009
New Store spend is $650-750 / sq ft
Company does not use a centralized food purchasing system relying instead on local and regional suppliers
Marketing and Advertising spend is ~1% of sales as a result of focused and selective approaches
Results are seasonal with 2Q and 3Q and last two weeks of 4Q being revenue intensive
Revenues are highly dependent on consumer’s discretionary income
Exposed to rising food and dairy costs for which effective hedging is not possible
Negative publicity risk
Regulations include wage rules, health insurance provision, worker safety, alcohol permits
Caloric reporting requirements could negatively impact sales
Healthcare costs are rising, not quantified as yet but will squeeze margins
Company carries insurance for protection against various lawsuits
$200mm credit facility maturing in Dec 2015
Board of Directors has a poison pill
Capex to be running higher than average going forward, $100-110mm in 2012
8.8mm share repurchase authorized outstanding
Stock Performance Relative to Market: 0
Sector Outlook: 1
Consumer discretion 3rd best performing sector YTD up 14.48% versus 10.33% for S&P 500 Relatively neutral, with moderating demand from consumers, risk from rising food prices and declining economic environment
Cash Flow: 0
Cash flow is relatively stable, but new restaurant openings, refreshes and expansion requires higher capex resulting in declining free cash flow going forward
| 2009 | 2010 | 2011 | ||
| Revenues | $1,602.0 | $1,659.4 | $1,757.6 | |
| COGS | 394.4 | 412.9 | 448.5 | |
| Labor Expenses | 528.6 | 537.0 | 567.4 | |
| Other Opex | 406.2 | 413.5 | 438.6 | |
| Gross Profit | 272.9 | 296.1 | 303.2 | |
| D&A | 75.2 | 72.1 | 72.0 | |
| G&A | 96.3 | 95.7 | 97.4 | |
| EBIT | 101.4 | 128.2 | 133.8 | |
| D&A | 75.2 | 72.1 | 72.0 | |
| EBITDA | 176.6 | 200.3 | 205.8 | |
| Capex | (37.2) | (41.8) | (76.7) | |
| Interest | (24.5) | (17.5) | (4.3) | |
| Working Capital | 0.3 | (7.2) | (9.8) | |
| Taxes | (18.6) | (31.0) | (27.2) | |
| FCF | 96.6 | 102.7 | 87.7 | |
| CFO | 198.8 | 167.1 | 196.1 | |
| CFI | (77.6) | (43.7) | (74.7) | |
| CFF | (167.5) | (115.5) | (151.9) | |
| Net Income | 42.8 | 81.7 | 95.7 | |
PEG Ratio: -1
| P/E | 18.1 | |||
| 2011 | 2012 | |||
| EPS | 1.64 | 1.86 | 13.4% | |
| PEG Ratio | 1.35x |
Valuation: -1
Value Pro shows a 22% downside from the current price of $29.70
Adjusted FCF for 7 yrs from 10 yrs
Adjusted growth rate to 5%
10 yr treasury at 3%
Investment Rate is adjusted to reflect higher CAPEX
Equity risk premium assumed at 5%
Beta is lowered to accurately reflect a lower cost of capital
Catalyst: 0
Dairy and Produce price stabilization, consumer confidence and disposable income needs to improve