Earnings Preview: Bloomin' Brands

Jon is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Bloomin' Brands ) is home to several restaurant favorites in the casual dining sector.  In fact, according to some surveys, they have 3 of the top 10 casual dining restaurants in their portfolio, including top dog Bonefish Grill.  Other restaurants in their quiver include Outback Steakhouse and Carrabba's.

Since Bloomin' Brands just went public a couple of months ago, the internet isn't completely saturated with financial reports and analysis.  I sat down with the company's prospectus from their IPO and gave it a look through.  There's a lot of stuff there, but after reading it I've honed in on one thing that I'll be looking for when Bloomin' announces their 3rd Quarter results on November 8.

So you can understand the business a little bit more, let's look at some key metrics compared to other competitors in the casual dining sector.

<table><tbody><tr><td><strong>Company</strong></td><td><strong>Market Cap</strong></td><td><strong>P/E</strong></td><td><strong>Forward P/E</strong></td><td><strong>Dividend/Yield</strong></td><td><strong>Approximate Restaurant Count</strong></td></tr><tr><td><span>Bloomin' Brands</span></td><td>1.57 Billion</td><td>14.26</td><td>12.50</td><td>n/a</td><td>1,443</td></tr><tr><td><strong><span><span>Darden</span></span> Restaurant</strong> )</td><td>6.82 Billion </td><td>14.54 </td><td>12.11 </td><td>$2.00/3.8% </td><td>2,000+ </td></tr><tr><td><strong>Cracker Barrel</strong> )</td><td>1.49 Billion</td><td>17.17</td><td>13.59</td><td>$1.60/2.7%</td><td>620</td></tr><tr><td><strong>Ruby Tuesday</strong> <span class="ticker" data-id="205291">(NYSE: <a href="http://caps.fool.com/Ticker/RT.aspx">RT</a>)</span></td><td>465.97 Million </td><td>n/a </td><td>20.64 </td><td>n/a </td><td>783 </td></tr></tbody></table>

When it comes to the key statistics, things seem to be pretty in line with this industry.  To me, the main thing that stands out when looking at these numbers:  they are profitable.  Ruby Tuesday has struggled to remain profitable through touch economic times.  At least we can say that Bloomin' has maintained profitability.  One other thing worth mentioning is that Bloomin' does not have a dividend like Darden and Cracker Barrel.

While Bloomin' Brands is best known for it's Aussie themed Outback Steakhouse, there are 5 main restaurants that make up this company.  The following chart shows the breakdown of their 1,443 restaurants.

<img src="/media/images/user_12962/mathwarehouse-pie_large.png" />

As an investor, you're probably looking for a growth opportunity.  This stock does not offer a dividend, so there's little other reason to invest.  We would only invest in this company if we were convinced of the growth opportunities they possess.

If you look at the growth they've experienced over the past year, it's somewhat disappointing.  Bloomin' Brands from June 30th 2011 - June 30th 2012 only added 15 net restaurants.  I say "net" because Carrabba's is down a restaurant.  Outback added 6 locations.  The bulk of the growth came, perhaps surprisingly, from Bonefish Grill. Last year, Bonefish had 152 restaurants.  One year later they had 162, for a gain of 10 locations.  That's means the count is up 6.5% on the year.

If you're interested in Bloomin' Brands, then you need to become very familiar with what is happening with Bonefish Grill.  The company is banking a lot on this restaurant concept, because they believe it has the potential to double in the foreseeable future.  Their prospectus states:  "Bonefish Grill unit growth will be our top domestic development priority in 2012, with 20 or more new restaurants planned." (emphasis mine)  They are convinced enough of the feasibility of doubling Bonefish, that they are willing to make it their top domestic priority this year.

If indeed this is their top priority for the year, then this is what I'll be looking at when they release their earnings in a couple of weeks.  The goal is 20+ Bonefish restaurants this year.  If they can hit that goal, or at least lead me to believe that they will hit that goal this year, I'm going to feel pretty good about this company's prospects.  I like management to be ambitious, but I also like them to be realistic.  We know that companies don't always hit all their goals.  But if they can't hit their number one priority goal, that is going to worry me as an investor.


thequast has no positions in the stocks mentioned above. The Motley Fool owns shares of Darden Restaurants. Motley Fool newsletter services recommend Cracker Barrel Old Country Store. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

blog comments powered by Disqus