Bloomin’ Brands (BLMN), mcap=$1.5bn, price $16.49 vs $20.96

– Contrarian idea for brave investors.
– Casual dining restaurant brand operator.
– Indiscriminately beaten down to below pre-pandemic valuation together with other re-opening trades due to potential recession concerns.
– However, the company made structural and durable improvements in the business model (SSS growth, overall profitability, and deleveraged balance sheet), that are not being recognized by investors.
– Trades below historical valuation multiples.
– FY23 normalized earnings are projected to be +50% above pre-pandemic levels.
– Expected to re-rate from the current bottom basement multiple of 4.7x to 7x-8x, still materially below high-quality peers.

– FY23 normalized EBITDA should track almost 50% above FY18/19 levels and EPS about 85% ahead of the same period.
– The highest quality industry peers DRI and TXRH trade at 10-12x EBITDA multiples.
– With expected re-rating to 7x-8x multiple on normalized FY23 earnings, BLMN target is at $37-43/share.

Exp. gain: 80%-110% to $37-43/share.

Full BLMN write-up (free guest account required):

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