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    This document contains an analysis of Bloomin' Brands using comparable company analysis and a multiples approach. The analysis considers Chipotle Mexican Grill to be the most comparable company to Bloomin' Brands based on their similar size, geographic presence, and both being company-owned casual dining businesses. Using a multiples approach, the analysis finds that Bloomin' Brands has a PEG ratio of 3.3 compared to ratios below 2 for competitors, indicating it is overvalued. Additional analysis of growth rates, economic conditions, and profitability would provide more context to refine the valuation.

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    This document contains an analysis of Bloomin' Brands using comparable company analysis and a multiples approach. The analysis considers Chipotle Mexican Grill to be the most comparable company to Bloomin' Brands based on their similar size, geographic presence, and both being company-owned casual dining businesses. Using a multiples approach, the analysis finds that Bloomin' Brands has a PEG ratio of 3.3 compared to ratios below 2 for competitors, indicating it is overvalued. Additional analysis of growth rates, economic conditions, and profitability would provide more context to refine the valuation.

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    This document contains an analysis of Bloomin' Brands using comparable company analysis and a multiples approach. The analysis considers Chipotle Mexican Grill to be the most comparable company to Bloomin' Brands based on their similar size, geographic presence, and both being company-owned casual dining businesses. Using a multiples approach, the analysis finds that Bloomin' Brands has a PEG ratio of 3.3 compared to ratios below 2 for competitors, indicating it is overvalued. Additional analysis of growth rates, economic conditions, and profitability would provide more context to refine the valuation.

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    Download as docx, pdf, or txt
    203 views3 pages

    Write Up

    Uploaded by

    Doritosxu
    This document contains an analysis of Bloomin' Brands using comparable company analysis and a multiples approach. The analysis considers Chipotle Mexican Grill to be the most comparable company to Bloomin' Brands based on their similar size, geographic presence, and both being company-owned casual dining businesses. Using a multiples approach, the analysis finds that Bloomin' Brands has a PEG ratio of 3.3 compared to ratios below 2 for competitors, indicating it is overvalued. Additional analysis of growth rates, economic conditions, and profitability would provide more context to refine the valuation.

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    BLOOMIN BRANDS

    Yuanting Shi
    David Dong
    David Xu
    Yufei Yan
    Haochen Wei

    10/01/2016

    1.) Which of the twelve potential competitors described in the case do you consider
    to be an appropriate comparable to Bloomin Brands? Explain your answer.
    Among the twelve potential competitors, we consider Chipotle Mexican Grill is most
    comparable to Bloomin Brands considering their size, geographic presence and type
    of business:
    Bloomin Brands
    Chipotle Mexican Grill
    Size
    1,500 casual dining
    2,000 fast-casual
    restaurants
    restaurants
    Geographic presence
    US, Puerto Rico, Guam,
    US, Canada, Britain,
    and over 20 countries
    Germany and France
    Type of business
    90% are company-owned
    Company-owned
    (or texas roadhouse because they sell steak? How do you guys think?)
    2.) Using the information in Exhibit 1, value Bloomin Brands using a multiples
    approach. Does the company appear to be over- or under-valued?
    In general, using just the P/E ratio would make high-growth companies appear
    overvalued relative to others. To compare companies with different growth rate, we
    should use PEG ratio. A fairly valued company will have its PEG ratio close to 1
    (stock is reasonably valued given the expected growth). And for investors, the
    lower PEG ratio the better (a lower PEG means that the stock is undervalued more).
    Currently, Bloomin Brands has a PEG ratio of 3.3, much higher than 1. Thus,
    Bloomin Brands is over-valued.

    PE TTM
    PE forward
    EPS g
    PEG
    Mkt cap (B)
    EPS
    Price TTM
    Price forward

    CMG
    58.8
    38.1
    17.70%
    1.5
    11.6
    6.76
    397.488
    257.556

    TXRH
    29.5
    22.9
    13.30%
    2.2
    3.3
    1.58
    46.61
    36.182

    BLMN
    40.2
    12.6
    12.10%
    3.3
    2.2
    0.48
    19.296
    6.048

    3.) What additional information or analyses would be useful to further refine your
    value estimate from 2.)? Explain your answer.
    PEG ratio is sensitive to expected EPS growth rates, which are subject to the
    limitations of projecting future events.
    (havent learned yet, copied from Wikipedia):

    To justify the expectation, we should further analyze economy, market conditions,


    expansion setbacks, hype of investors, as well as ROE ratio.
    Particularly, PEG ratio is less appropriate for measuring companies without high
    growth. First, the absolute company growth rate used in the PEG does not account
    for the overall growth rate of the economy, and hence an investor must compare a
    stock's PEG to average PEG's across its industry and the entire economy to get any
    accurate sense of how competitive a stock is for investment. A low (attractive) PEG
    in times of high growth in the entire economy may not be particularly impressive
    when compared to other stocks, and vice versa for high PEG's in periods of slow
    growth or recession. In addition, company growth rates that are much higher than
    the economy's growth rate are unstable and vulnerable to any problems the
    company may face that would prevent it from keeping its current rate. Therefore, a
    higher-PEG stock with a steady, sustainable growth rate (compared to the
    economy's growth) can often be a more attractive investment than a low-PEG stock
    that may happen to just be on a short-term growth "streak". A sustained higherthan-economy growth rate over the years usually indicates a highly profitable
    company, but can also indicate a scam, especially if the growth is a flat percentage
    no matter how the rest of the economy fluctuates (as was the case for several
    years for returns in Bernie Madoff's Ponzi scheme). Finally, the volatility of highly
    speculative and risky stocks, which have low price/earnings ratios due to their very
    low price, is also not corrected for in PEG calculations. These stocks may have low
    PEG's due to a very low short-term (~1 year) PE ratio (e.g. 100% growth rate from
    $1 to $2 /stock) that does not indicate any guarantee of maintaining future growth
    or even solvency.

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