ARCO

Resetting Your Mental Model

by

Image Source: affen ajlfe A version of this article was originally published on our website October 6, 2013. Having the right mental model and using the right information can be the reason why you win or lose in investing. “What is the definition of timeliness? Many believe it is getting information to investors as quickly as possible after an event, or updating something every single day or week for immaterial information. I believe in a different definition of timeliness. I believe timeliness is using all information available in a mosaic approach to accurately predict the event before it even happens. Take Kinder Morgan as the latest example. We were the only ones predicting what was going to happen before it did. To investors, … Read more

Yum! Brands Buys Habit Restaurants

by

Image Shown: An overview of Yum! Brands Inc’s operations. Image Source: Yum! Brands Inc – Investor Fact Sheet By Callum Turcan On January 6, quick-service restaurant chain Yum! Brands Inc (YUM) (which owns the KFC, Pizza Hut, and Taco Bell brands) announced that it was acquiring fast causal burger joint Habit Restaurants Inc (HABT) for $14 per share in cash for a total cash consideration of $375 million. Habit Burger’s footprint includes ~265 restaurants in total across more than a dozen US states and China under its namesake brand, Habit Burger Grill, and please note roughly 90% of those locations are company-owned. While Habit Restaurants’ footprint is relatively small compared to Yum! Brands’ footprint of over 49,000 locations in more … Read more

Cracker Barrel Doing Well Despite Industry Headwinds

by

Image Source: 2019 Annual Shareholder Meeting, November 21. Although the restaurant business continues to face pressures, Cracker Barrel’s fundamentals have outperformed. By Brian Nelson, CFA The month of October was not kind to many in the restaurant business. While restaurant same-store sales advanced 0.06% in October, according to data from TDn2K, comparable traffic fell 3.1% during the month. While comp sales for the broader restaurant industry may remain positive through the remainder of 2019 thanks to pricing growth, the problem is that to-go and off-premise sales are hurting traffic. Here’s what TDn2K had to say about that: The erosion of guest counts remains unchanged, as restaurants rely on to-go and off-premise sales to fuel growth. Third-party delivery is playing a … Read more

McDonald’s Enters the Chicken Sandwich Wars

by

Image Shown: Shares of McDonald’s Corporation have pulled back over the past couple of months after an epic run during most of 2019, which we view as the market recognizing shares of MCD had gotten way ahead of themselves. By Callum Turcan McDonald’s (MCD) is testing out a new crispy chicken sandwich offering in two US cities; Knoxville, Tennessee and Houston, Texas. This pilot project is expected to run through January 2020. While McDonald’s offers the ‘McChicken, its new chicken sandwich offering is far more substantial (the McChicken is to a chicken sandwich what the ‘McDouble’ is to a burger) and meant to compete with offerings from privately-held Chick-fil-A and Restaurant Brands International Inc’s (QSR) Popeyes Louisiana Kitchen. We still … Read more

Our Reports on Stocks in the Restaurants – Fast Food & Coffee/Snacks Industry

by

Structure of the Restaurants – Fast Food & Coffee/Snack Industry The restaurant industry has benefited from a long-term trend toward eating out, but the space has become increasingly more competitive as new concepts are introduced and successful chains expand. Not only are there pricing pressures and trade-down threats, but rising costs for commodities and labor have pressured profits. Barriers to entry are low, and many constituents have a difficult time differentiating themselves. We tend to like larger chains that benefit from scale advantages and international expansion opportunities, though niche franchises can be appealing. We’re neutral on the structure of the group. For our coverage of firms in the Restaurants – Fast Food & Coffee/Snack industry, please click here.

McDonald’s Not on the Value Menu

by

We can’t get anywhere close to McDonald’s share price with our discounted cash-flow valuation process. That doesn’t mean that shares are destined to fall, but it may indicate that the stock has pulled forward future returns. In any case, investors in McDonald’s should be cautious. By Brian Nelson, CFA McDonald’s (MCD) has done a wonderful job in years past, pursuing all-day breakfast and transitioning (even) more to a franchise business model, but these changes are now behind the fast-food restaurant. Our fair value estimate for McDonald’s is in the mid-$150s (its shares are trading over $200), and frankly, we’re having a very difficult time coming anywhere close to how high the market is valuing shares. During the firm’s second-quarter results, … Read more

Cracker Barrel ‘s Lofty (and Hidden) Dividend Yield

by

Image Source: Cracker Barrel Presentation (10/17) By Brian Nelson, CFA Incredible. Cracker Barrel (CBRL) just issued announced another special dividend, to the tune of $3 per share. This special dividend is in addition to the regular quarterly dividend of $1.30 per share, which was increased 4% from the previous quarterly dividend of $1.25 per share. All in, annualizing the new quarterly rate and including the special dividend in the sum, Cracker Barrel yields nearly 5% at the time of this writing. You won’t hear many talking about the firm’s lofty yield because a large part of it has been from the special-dividend variety, which has been recurring for the past many years. On a fundamental basis, we have no qualms … Read more

Dividend Increases/Decreases for the Week Ending March 29

by

Below we provide a list of firms that raised their dividends during the week ending March 29. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Arcos Dorados Holdings (ARCO): now $0.11 per share annual dividend, was $0.10. Bank of South Carolina (BKSC): now $0.16 per share quarterly dividend, was $0.15. Banner (BANR): now $0.41 per share quarterly dividend, was $0.38. Columbus McKinnon (CMCO): now $0.06 per share quarterly dividend, was $0.05. ConnectOne Bancorp (CNOB): now $0.09 per share quarterly dividend, was $0.075. Dassault Systemes (DASTY): now EUR 0.65 per share annual … Read more

Earnings Roundup: Fast Food and Coffee

by

Image Source: Phillip Pessar Let’s take a look at some of the biggest restaurant operators in the fast food and coffee space. Established players continue to refranchise their massive global chains, and innovation in the digital channel may ultimately separate some from the pack. By Kris Rosemann Starbucks Comps Grow Nicely; Reiterates Fiscal 2019 Guidance Starbucks’ (SBUX) fiscal 2019 first quarter report, released January 24, revealed top-line strength in the form of 9% year-over-year net revenue growth as global comparable store sales grew 4%. A 3% increase in average ticket on a global basis was key to the increase in comparable store sales, and US comparable store sales growth came in at 4% from the year-ago period despite transactions being … Read more

Valuentum Stock Screeners

by

This article was sent to members via email December 29. That email can be accessed at the link that follows this article. By Brian Nelson, CFA Hi everyone, I wanted to provide an update with respect to Valuentum’s stock screeners. We believe our stock screeners are among the most robust when it comes to providing forward-looking data, or data that is important with respect to the investment decision-making process. We publish screens in each of the monthly newsletters, but we also provide a basic weekly screener for download on the left column of the website, “Download Weekly Stock Screener (xls) — login required.”   We also have other products. The more robust DataScreener, for example, is part of the quarterly Financial … Read more