Friday, August 14, 2020

FAT Brands Inc. (FAT)

A Rocketship of an Acquisition

FAT Brands Inc is a multi-brand restaurant franchising company. It develops, markets, and acquires predominantly fast casual restaurant concepts. The company provides turkey burgers, chicken Sandwiches, chicken tenders, burgers, ribs, wrap sandwiches, and others. Its brand portfolio comprises Fatburger, Buffalo’s Cafe and Express, and Ponderosa and Bonanza. The company’s overall footprint covers nearly 32 countries. Fatburger generates maximum revenue for the company.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Adding Johnny Rockets. Yesterday, FAT Brands announced a transformative agreement to purchase the Johnny Rockets franchise for $25 million. Founded in 1986, Johnny Rockets is a casual burger chain known for its 1950s diner style decor. The chain has over 325 locations in the U.S. and 25 countries across the globe. Closing should be in mid-September.


Impact. Johnny Rockets basically will double the size of FAT Brands, both from a unit count and from an adjusted EBITDA perspective, based on a normal operating environment. With about one-third of its locations in casinos, airports, theme parks, etc, we would expect the pandemic to have …










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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Friday, August 7, 2020

FAT Brands Inc. (FAT)

What Has Been the COVID Impact?

FAT Brands Inc is a multi-brand restaurant franchising company. It develops, markets, and acquires predominantly fast casual restaurant concepts. The company provides turkey burgers, chicken Sandwiches, chicken tenders, burgers, ribs, wrap sandwiches, and others. Its brand portfolio comprises Fatburger, Buffalo’s Cafe and Express, and Ponderosa and Bonanza. The company’s overall footprint covers nearly 32 countries. Fatburger generates maximum revenue for the company.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Raises Additional Capital

2Q20 Results. Revenue of $3.1 million and a reported net loss of $0.36 per share versus our estimates of $3.4 million and a loss of $0.17 per share. Included in the results, however, were a $3.2 million asset impairment charge, higher than normal re-franchising losses, and a $1.2 million derivative liability gain. If we adjust for the impairment and derivative, EBT was a loss of $3.4 million versus the reported loss of $5.3 million and our $2.5 million loss estimate.


Steakhouses Holding Back Results. System-wide sales declined 51.1% in the quarter but excluding Ponderosa and Bonanza locations, many of which remain shuttered, system-wide sales growth dropped 29.1% as the other concepts’ switch to “to go” and delivery orders limited the COVID damage. Recently, FAT locations have …










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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Monday, July 20, 2020

FAT Brands Inc. (FAT)

Raises Additional Capital

FAT Brands Inc is a multi-brand restaurant franchising company. It develops, markets, and acquires predominantly fast casual restaurant concepts. The company provides turkey burgers, chicken Sandwiches, chicken tenders, burgers, ribs, wrap sandwiches, and others. Its brand portfolio comprises Fatburger, Buffalo’s Cafe and Express, and Ponderosa and Bonanza. The company’s overall footprint covers nearly 32 countries. Fatburger generates maximum revenue for the company.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Capital Raise.  FAT Brands raised $8.0 million, net, in additional capital through the sale of 360,000 shares of 8.25% Series B Cumulative Preferred stock at $25 per share. Attached to the Series B shares were a total of 1,899,000 warrants each to purchase one common share at an exercise price of $5.00 per share. Both the preferred shares and the warrants are expected to trade under the symbols FATBP and FATBW.


Use of Proceeds. Approximately $2.6 million of the proceeds will be used to redeem a portion of the outstanding Series A preferred stock, with another $300,000 used to pay dividends on the Series A-1 preferred stock. The remainder will be used for …










Click to get the full report

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Friday, June 19, 2020

1-800-Flowers.com (FLWS)

The Guidance Was Raised To What?

1-800-FLOWERS.COM, Inc. is the leading provider of gourmet and floral gifts for all occasions. For nearly 40 years, 1-800-FLOWERS® has been helping deliver smiles for customers with gifts for every occasion, including fresh flowers, premium, gift-quality fruits, and other gourmet items from Harry & David®, popcorn and specialty treats from The Popcorn Factory®; cookies and baked gifts from Cheryl’s®; premium chocolates and confections from Fannie May®; gift baskets and towers from 1-800-Baskets.com®; premium English muffins and other breakfast treats from Wolferman’s; carved fresh fruit arrangements from FruitBouquets.com; and top quality steaks and chops from Stock Yards®. The Company’s BloomNet® international floral wire service provides a broad range of quality products and value-added services designed to help professional florists grow their businesses profitably.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Extraordinary upward revised full year 2020 guidance.Due to very strong ecommerce demand, the company raised fiscal full year 2020 revenue guidance to increase in a range of 16% to 18%, up from 8% to 9%. This implies Q4 revenue growth of an extraordinary 50%. Adjusted EBITDA guidance was raised from a range of 13% to 15% to a range of a 50% to 55%. This implies adjusted EBITDA of a positive roughly $27 million versus an historical seasonal loss. Earnings per share is expected to increase 75% to 85% and free cash flow was raised from a range of $45 million to $50 million to a range of $75 million to $85 million.


Not just about Mom. The company was able to increase Mother’s Day sales by offering variable shipping days well in advance of Mother’s Day. This allowed support strapped florists the ability to fill orders that would otherwise be delivered….










Click to get the full report.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

As Lockdowns Come to an End, Are Customers Dining Out?

Industries hardest hit by the lockdown have the most potential for recovery.  Some still face significant unknowns about their future. Investors looking for signs of life in foodservice have been getting clear positive indications. Demand for dining out is returning, and there has been renewed activity showing up at their tables, in their earnings, and in their stock prices. The easing of pandemic restrictions on dining out has been regional, so recoveries are on different timelines. But the speed at which restaurants reached the allowed 25-50% capacity peak is very encouraging.  There doesn’t seem to be a high level of fear among patrons of leaving the house and being out among strangers. Ironically, pictures of the unrest during the past week and people throughout the world out and among crowds may be helping a mindset that it’s okay to be around others once more. All of this could quickly change if the Covid-19 cases surprise with a resurgence, or violence toward public places escalates. But, for now, the trend is very much in favor of customer traffic climbing above where it is now.

A Clear Trend

Recent sales data from restaurant chains such as Red Robin, Cheesecake Factory, and Dine Brands (Applebee’s, IHOP) have created renewed interest in the restaurant sector; it’s being reflected in price movement.

Monday June 1, through Monday June 8, the S&P 500 has risen 6.48% while these food and beverage stocks had much better results:

DENN 32.84%

FAT 19.03%

RUTH 26.21%

RRGB 62.74%

SHAK 15.56%

Visibility Looking Forward

One thing 2020 has reminded us of is that everything can change in a heartbeat. Last week, updates from a few well-known restaurants were a refreshing reminder that change swings both ways. An announcement from management at Cheesecake Factory said they had generated roughly 75% of the prior-year sales levels, driven by an increase in off-premise sales and rebounding dine-in business while operating under local capacity restrictions. Management hopes that 65% of dining rooms will be reopened by mid-June. Last week Red Robin released business updates expressing dine-in crowds were rebounding. Management at Red Robin expects to have 65% of its dining rooms open by June 7.

One bonus that may have come from this is curbside or take-out sales continue to generate meaningful revenue. As restaurants attain capacity levels in their dining rooms, they may incrementally do better than in the past if they can retain take-out customers. This suggests that its customer capacity per location may have permanently increased.

Now What?

Although the sales data and trends previously mentioned were positive, investors also have to remember that many restaurants will still be announcing financial pain experienced during the entire second quarter. Cheesecake Factory, for instance, recorded a 63% decline in same-store sales during the second quarter through May 31. Ultimately, restaurant stocks took a big hit, and now data has indicated the worst could be over. It’s no surprise to see relief buying of so many food and beverage companies.

New Normal in Dining

Some competitors of the restaurant industry will emerge from the pandemic in better shape than before. Grocery store chains and meal-kit companies grew their businesses during the pandemic. It’s likely that a percentage of these new customers will continue providing business. Privately owned restaurants may see traffic that may have otherwise gone to larger corporate-owned chains as people may want to support their neighborhood owners first.

Shares of restaurants are still trading farther below off their pre-pandemic high than the broader market indexes. If the trend toward filling dining rooms continues, the potential for greater interest in this sector could continue as well.

 

Suggested Reading:

Climbing a “Wall of Worry”

What Now? Post-Pandemic Stock Market Investing

Rearview Mirror Measurements in Economics

Enjoy Premium
Channelchek Content at No
Cost

Cheesecake Factory Aims to Reopen Most of its Restaurants by
Mid-June

Here’s Why You Should
Hold on to Red Robin Stock for Now

Tuesday, June 2, 2020

FAT Brands Inc. (FAT)

FAT Brands: Multi-brand Franchisor with Multiple Growth Avenues

FAT Brands Inc is a multi-brand restaurant franchising company. It develops, markets, and acquires predominantly fast casual restaurant concepts. The company provides turkey burgers, chicken Sandwiches, chicken tenders, burgers, ribs, wrap sandwiches, and others. Its brand portfolio comprises Fatburger, Buffalo’s Cafe and Express, and Ponderosa and Bonanza. The company’s overall footprint covers nearly 32 countries. Fatburger generates maximum revenue for the company.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

We are Initiating Coverage on this Company.

Initiating Coverage. We are initiating coverage of FAT Brands Inc. Our rating is based on the current unknown impacts of the economic crisis on the restaurant industry and the Company in particular. However, we look favorably upon the Company’s management team, its past success in turning around acquired brands, growth potential, the Company’s M&A strategy, and solid existing financial position.


Company Overview. FAT Brands is a franchisor of various restaurant concepts. At the end of 2019, the Company’s franchisees operated 374 locations under seven different banners across four continents and 31 countries. System-wide revenues were $394 million in 2019. FAT generates revenues through one time franchise fees as well as ongoing royalty payments. The Company’s asset…










Click to get the full report.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Tuesday, June 2, 2020

FAT Brands Inc. (FAT)

FAT Brands: Multi-brand Franchisor with Multiple Growth Avenues

FAT Brands Inc is a multi-brand restaurant franchising company. It develops, markets, and acquires predominantly fast casual restaurant concepts. The company provides turkey burgers, chicken Sandwiches, chicken tenders, burgers, ribs, wrap sandwiches, and others. Its brand portfolio comprises Fatburger, Buffalo’s Cafe and Express, and Ponderosa and Bonanza. The company’s overall footprint covers nearly 32 countries. Fatburger generates maximum revenue for the company.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

We are Initiating Coverage on this Company.

Initiating Coverage. We are initiating coverage of FAT Brands Inc. Our rating is based on the current unknown impacts of the economic crisis on the restaurant industry and the Company in particular. However, we look favorably upon the Company’s management team, its past success in turning around acquired brands, growth potential, the Company’s M&A strategy, and solid existing financial position.


Company Overview. FAT Brands is a franchisor of various restaurant concepts. At the end of 2019, the Company’s franchisees operated 374 locations under seven different banners across four continents and 31 countries. System-wide revenues were $394 million in 2019. FAT generates revenues through one time franchise fees as well as ongoing royalty payments. The Company’s asset…










Click to get the full report.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Too Busy to Shop?

(Note: companies that could be impacted by the content of this article are listed at the base of the story (desktop version). This article uses third-party references to provide a bullish, bearish and balanced point of view; sources listed in the “Balanced” section) 

Modern life is busy. We are constantly running around and do not always have time to go grocery shopping, often resulting in paying for take-out. In 1985, seventy-one percent of meals eaten at home were home-cooked. Today, that number is down to sixty percent and falling. Over a decade ago Middagsfrid created a meal kit delivery company in Sweden. The concept did not make its way over to the U.S. until around 2015 after Goldman Sachs reported they expected the industry to grow between $3 – $5 billion by 2020. Their estimate has still held and is still on track to reach that value. In the last half of 2018, 14.3 million households purchased meal kits, which was up 3.8 million from 2017.