Monday, October 12, 2020

FAT Brands Inc. (FAT)

Upgrading to Outperform with $8 Price Target

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.

Upgrading to Outperform. We are upgrading FAT Brands to Outperform from Market Perform and initiating an $8.00 12-month price target. With the dust and euphoria settling from the Johnny Rockets acquisition announcement, when the shares ran up to $10.25, we believe the risk/reward situation has turned favorable for FAT Brands and its asset light, high growth restaurant franchising model.


Johnny Rockets Acquisition.  Completed on September 22nd for $25 million, Johnny Rockets added some 322 locations, $316 million of system-wide sales, and 129 franchisees. FAT Brands now has over 700 restaurant locations, over $700 million of system-wide sales, and 305 franchisees, including 101 multi-unit franchisees. FAT now operates in 36 U.S. States and 37 countries …

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. 

 

More Frequent Travel Could Be the Actual Aftermath of the Pandemic

 

The surprise pandemic this year has been followed by more than a few wrong predictions.  Foremost, in my mind, is the explosive rally in the stock market. This was not expected back in March. Rising real estate prices and bidding wars would also seem to run counter to what we’d expect with double-digit unemployment. Yet, low-interest rates and an increased need to provide for family have led to significant increases in house prices in many areas. One of the industries that predictably has been hard hit is travel, but this sector may well find it bounces back quickly and perhaps with a broader customer base.

 

Flexibility in Workspace

While there has been a focus on the reduction in leisure travel and business travel, there has been a blind spot to the increased ability to work from anyplace. The average 9 to 5 office worker learned very quickly with COVID-19, often at the insistence of their employer, how to work from home. This new skill set is not going away. The options it allows in a Wi-Fi world may very well lead to a large increase in those taking advantage of their new geographic liberty by treating themselves to a “workcation.”   Workcations, or doing your job someplace where you can enjoy being in a new setting, allow for sightseeing or play when the workday is over. This type of remote work/travel was already rising in popularity before the pandemic. The dramatic acceptance by employers of remote working during the lockdown has already increased rentals in secluded areas such as the mountains and beachside. Looking forward, as risks in metropolitan areas subside, there is no reason to believe they won’t become popular as well.

 

Travel Companies are Creating Packages to Cater to the Workcation Trend

Source:Travelzoo.com top 20 deal list

 

Do People Expect to Travel

Results of a survey released in August by Allianz travel insurance division revealed 44 percent of its U.S. travel insurance customers plan to travel before the year is out. In the same survey, 30 percent were unsure when they’d travel next, and even fewer felt they’d wait until next year or longer.

The survey showed a correlation between respondents’ ages and when they expected to travel next. A higher percentage of older customers were less likely to have an estimate of when they’d take their next trip, compared with younger customers. Specifically, 31 percent of those ages 55 and over replied they don’t know when they’d travel again, versus 26 percent of those under the age of 55 who were unsure.

 

Spending on Travel

The Allianz survey sentiment was echoed in another poll by destinationanalysts.com. They found that as people looked at their situation over the next 12 months, they had greater optimism. In August, they discovered 43.0% of American travelers say that leisure travel will be at least a somewhat high priority in their personal budget. This is up from 34.7% six-weeks earlier. A majority of American travelers say the pandemic has not negatively impacted the disposable income they have for travel (62.7%). Surprisingly, annual budgets for leisure travel have increased to an average of $3,258 from $2,721 (in July). However, with over a third of American travelers and concerns about the virus’s impact on finances still elevated, American travelers are planning on being more cost-conscious than they were prior to the pandemic.

 

Source: DestinationAnalysts.com, August 31, 2020

 

Take-Away

The fast workplace adoption of meetings online, virtual conferences, and seminars have forever altered how we conduct business and reduced some requirement for travel. However, as with other forecasts in 2020, the predicted death of the travel industry may have been premature. Business travel will always be important as face to face meetings simply get deals done. When the pandemic fears lift, one possible scenario is online meetings may take a more supporting role in supplementing in-person contact.  This would bring business travel back up and perhaps increase business productivity. Individual travel, based on two separate surveys, should be on the rise by the end of the year.  Since the population is now less tethered to an office, this may lead to a surge in a new class of traveler, remote workers who move about to various destinations while still putting in a full day’s work. This could actually lead to a greater number of travelers than pre-pandemic levels.

Paul Hoffman

Managing Editor, Channelchek

 

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Sources:

Allianz

Update on American Travel in the Period of Coronavirus—Week of August 31st

 

Friday, August 28, 2020

1-800-Flowers.com (FLWS)

Long Legs in E-Commerce Trends; Raising Price Target

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.

Blows through Q4 estimates.Q4 revenue and cash flow estimates were over achieved based on strong ecommerce trends. Revenues were $417.6 million, nearly 7% better than our $391.4 million estimate. Cash flow, as measured by Adj. EBITDA, was better than expected as well, $32.5 million versus our estimate of $27.3 million.


Raising fiscal Q1 and full year 2021 estimates. Management provided Q1 guidance that was better than expected, with strong revenue growth of 40% to 45% and break even to slightly positive cash flow, a nice surprise in a typical seasonally unprofitable quarter. We are raising our fiscal 2021 cash flow estimate from …

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. 

Some Ecommerce sectors up 500% While others See Sales Cut in Half

Prior to COVID-19, the time and hassle of going to a mall compared to the convenience of online shopping were already moving consumers to e-commerce shopping. As fear of becoming infected or infecting others with a virus deadly to some grew, in-person shopping naturally declined. As the pandemic took root, the number of reported Covid cases grew. With that growth, the number of people deemed safe to congregate changed from thousands to hundreds, to tens. The combination of ease of online shopping, paired with pandemic anxiety, is a driving force in the spike in popularity of online shopping. As shipping technology and efficiency continue to develop, especially if the pandemic remains front-page news, the online shopping trend will increase at a pace that would not have otherwise occurred. Ecommerce is solidly on the winning side of the “new normal” put in place in 2020.

Background

COVID-19 has exposed the fragilities of the in-person retail industry. The United States has over 4 million confirmed cases and is closing in on 150,000 deaths. Consumers are now wary of public spaces. It is estimated that 80% of Americans now shop online. Ecommerce consumer sales are up 28% across retail sectors since earlier this year, an acceleration from 14.5% in the first quarter, which was only partially impacted by Covid.

Who’s Thriving, Who’s Diving

So, where do we stand? Are all E-commerce sectors reaping the benefits? How are small-cap companies competing with established e-commerce platforms? Is in-person retail a thing of the past?

Not all retail sectors are thriving. Some sectors that are seeing large dips in consumer sales are Jewelry & Luxury (10%), Fashion and Apparel (15%), Auto or Tools (45%), and Bags or Travel (55%). This is a result of the economic effect caused by the pandemic, and the altering in spending on goods that are deemed necessary. 96% of millennials and Gen Z’s, and 24% and 34% of Boomers and Gen X respectively, are concerned about their economic well-being during the pandemic. As such, many are spending more on stocking up items and less on more durable goods or even experiences. These shifts in spending, are leaving some retailers behind while others are thriving.

So, where are people spending their money?  Ecommerce consumer sectors such as Medical (500%), Food and Beverage (150%), Health and Wellness (80%), and Pets (50%) have soared during the shutdowns. As consumers shift, their focus on preparedness and self-care, so do their spending habits. The brick-and-mortar stores, if unable to adapt, are facing permanent closure. However, if able to adapt, consumer spending is not just benefiting mega-corporations such as Amazon, having a 26% percent jump in Q1 revenues. Small-cap companies are seeing growth, as well. For instance, 1800 Flowers indicated that in its upcoming fiscal fourth quarter, its food-centric, Harry & David business is expected to increase a whopping 90% in revenue. The company is also benefiting from gifting in its floral brand. It’s one of the companies that seems to be bucking the economic headwinds as consumers send gifts in a social distance conscience environment. Despite the pandemic, birthdays, holidays, anniversaries will all continue.

Take-Away

Bricks and mortar retailers are likely to struggle on two fronts, competition from online retailers and the generally weak economy. While the economic pace has had an adverse effect on some online retailers, the overall trend toward online shopping appears to be favorable and will likely continue beyond the current pandemic.

 

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Sources:

PulsarPlatform

Tuesday, July 28, 2020

1-800-Flowers.com (FLWS)

Puts The Acquisition To Bed

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.

Back on track.The company settles its issues with Bed, Bath & Beyond regarding the acquisition of PersonalizationMall.com and amends the purchase price to $245 million from $252 million. We believe that the new price largely adjusts for legal fees. Closing date is set for August 3rd.


Acquisition viewed favorably. The stall in the closing date allowed 1800Flowers to substantially improve its financial position, given strong growth in e-commerce sales, particularly for Harry & David. While PersonalizationMall.com was closed for a period of time due to …










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, May 1, 2020

1-800-Flowers.com (FLWS)

Can There Be Too Much Of A Good Thing?

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.

A remarkable quarter.The company shrugged off the impact of mitigation efforts of CoVid 19 and the economic shutdown with fiscal third quarter results ending March 30 in line with expectations. Total company revenues increased a solid 12.2% to $278.8 million. The seasonal adj. EBITDA loss of $2.4 million was slightly better than our loss estimate of $2.7 million.


Reiterates full year guidance. Revenue momentum seems to have accelerated in the fiscal fourth quarter. Management reiterated full year revenue guidance of 8% to 9% growth, adj. EBITDA growth of 13% to 15%, and EPS growth of 15% to 17%. Adjusting for the benefit of closing Harry & David stores, we are raising our…







Click here 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, May 1, 2020

1-800-Flowers.com (FLWS)

Can There Be Too Much Of A Good Thing?

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.

A remarkable quarter.The company shrugged off the impact of mitigation efforts of CoVid 19 and the economic shutdown with fiscal third quarter results ending March 30 in line with expectations. Total company revenues increased a solid 12.2% to $278.8 million. The seasonal adj. EBITDA loss of $2.4 million was slightly better than our loss estimate of $2.7 million.


Reiterates full year guidance. Revenue momentum seems to have accelerated in the fiscal fourth quarter. Management reiterated full year revenue guidance of 8% to 9% growth, adj. EBITDA growth of 13% to 15%, and EPS growth of 15% to 17%. Adjusting for the benefit of closing Harry & David stores, we are raising our…







Click here 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.