Famous Dave's Lags Estimates in 1Q - Analyst Blog
01 Maggio 2012 - 12:00PM
Zacks
Minnetonka, Minnesota-based
Famous Dave's of America Inc.(DAVE) reported first
quarter 2012 adjusted earnings of 12 cents per share, missing the
Zacks Consensus Estimate by 7 cents and the prior-year quarter
adjusted earnings by 4 cents. The earnings exclude the closure
costs of approximately one cent related to the sale of a
company-owned location in the reported quarter.
Famous Dave’s, which owns,
franchises and operates restaurants in U.S., reported total revenue
of $37.5 million, down 1.1% year over year, due to decrease in
same-store sales. Company-owned restaurants sales remained flat
year over year at $32.7 million. Franchise royalty revenue climbed
8.7% year over year to $4.4 million, benefiting from unit
growth.
Quarter
Highlights
Same-store sales for company-owned
restaurants declined 1.6% during the quarter compared with an
upside of 3.0% in the year-ago quarter. The downside in comparable
sales was attributable to a decrease in dine-in guest traffic.
Same-store sales at
franchise-operated restaurants inched down 0.1% compared with flat
growth in the first quarter of 2011.
As a percentage of restaurant
sales, food and beverage costs spiked 160 basis points to 31.1% and
labor and benefit expense expanded 130 basis points to 33.2%,
partially offset by a dip of 40 bps in operating expense to 29.3%.
As a percentage of total revenue, general and administrative
expense jumped 20 bps to 11.9% and depreciation and amortization
expense remained flat at 0.4%. Hence, the company’s operating
margin contracted 150 basis points to 4.0%.
Store Update
During the quarter, the company
opened one franchised restaurant. The company sold two franchised
and one company-operated restaurant during the reported
quarter.
At the end of the first quarter,
the company operated 185 restaurants, including 53 company-owned
restaurants and 132 franchise-operated restaurants.
Financial
Position
Famous Dave’s reported cash and
cash equivalents of $1.7 million and shareholders’ equity of $33.4
million at the end of first quarter 2012.
During the quarter, the company
repurchased 148,000 shares at an average price of $10.97, excluding
commission.
Outlook
In 2012, Famous Dave's expects to
open up to 15 restaurants, which includes 2 company-owned
restaurants. Of the 2 company-owned locations, one will come up in
Winnipeg, Canada; thus marking the company’s first opening outside
US.
The company also plans capital
expenditure of $6.5 million for the renovation and maintenance of
existing restaurants along with investment in various
infrastructure projects.
Our Take
As the economy is showing signs of
improvement, we believe Famous Dave's will likely generate improved
earnings. In 2012, the company will focus on mitigating the effect
of price increases of key items. However, estimates have not budged
in the last 30 days, indicating the absence of any near-term
catalysts.The Zacks Consensus Estimates for 2012 and 2013 are
pegged at 82 cents and 93 cents, respectively.
One of Famous Dave's primary
competitors, Brinker International Inc.’s (EAT)
reported third quarter 2012 earnings of 60 cents per share
surpassing the Zacks Consensus Estimate of 56 cents, driven by
higher restaurant margin and traffic growth.
The company has a Zacks #4 Rank,
which implies a short-term Sell rating on the stock. We also
reiterate our long-term Neutral recommendation.
FAMOUS DAVES (DAVE): Free Stock Analysis Report
BRINKER INTL (EAT): Free Stock Analysis Report
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