The ONE Group Hospitality (STKS), mcap=$249, price $7.53 vs $9.02

Pitch:
– A fast-growing, profitable dual-restaurant concept with a significant amount of available “whitespace” in which to add new locations.
– Owner of STK Steakhouse and Kona Grill restaurants + food and beverage management company servicing hotels.
– Best-in-class same-store sales increase.
– Trades materially below public comps and recent transactions.
– Attractive acquisition target for larger restaurant operators.

Valuation:
– EBITDA is set to increase +80% over two years driven by a +33% increase in unit count, +20% higher SSS, and 2% margin improvement.
– Public comps and recent transactions indicate 11x EBITDA to be a reasonable multiple.
– At 11x ’23 expected EBITDA, it’s a $28/stock.

Exp. gain: +165% to $28/share over two years.

Full STKS write-up (free guest account required): https://www.valueinvestorsclub.com/idea/ONE_GP_HOSPITALITY_THE/2130221601

Published on: July 15, 2022  •  Published by:
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