Impressive Prelim Results at AFC - Analyst Blog
January 30 2012 - 5:15AM
Zacks
AFC Enterprises
Inc. (AFCE) recently posted impressive preliminary
operating results for fiscal 2011 and also lifted the earnings
guidance.
In fiscal 2011, global same-store
sales spiked 3.1% versus a 2.6% growth in 2010, exceeding the
company’s previous full-year guidance of 2.0%-2.5%. For the fourth
quarter of 2011, global same-store sales increased 5.8%, compared
with a 6.0% increase a year ago.
The company now expects general and
administrative expenses for full year 2011 to be in the range of
$61.2-$61.4 million. The company’s general and administrative
expenses account for 3.1% of system-wide sales, which remains one
of the lowest in the restaurant industry.
The effective tax rate for the full
year is now expected to be approximately 35.0-36.0%, compared with
the previous guidance of 36.0-37.0%, due to tax credits recognized
during the year.
The operator and franchisor of
Popeye’s restaurants now expects fourth quarter adjusted EPS to be
within the range of 23-24 cents. The company raised its full year
adjusted EPS guidance to 98-99 cents from the earlier guidance
range of 93 to 97 cents. Previously, AFC Enterprises
increased its 2011 adjusted EPS outlook to 93-97 cents from 91-95
cents per share. On a GAAP basis, AFC Enterprises’ fourth quarter
earnings are expected to be 22-23 cents and the same for the full
year to be 96-97 cents.
Store Update
The company opened 32 domestic and
20 international new Popeye units in fourth-quarter 2011, leading
to full year 2011 openings of 140 restaurants. The openings were in
line with the company’s previous guidance of 130 to 140 new
restaurants in 2011. The company also closed 75 restaurants in
2011.
Estimate
Revision
Following the announcement, a
positive sentiment has been prevailing around the stock. In the
last seven days period, both the analysts covering the stock raised
their estimates for the upcoming fourth quarter as well as fiscal
2011.
Estimate for fourth-quarter 2011
increased 3 cents to reach 24 cents while full year estimate went
up to 99 cents from 96 cents in the last seven days period.
We remain optimistic on the stock
of the world's second largest quick-service chicken restaurant
chain as it is witnessing solid growth momentum, resulting in an
upside in outlook.
AFC currently has a Zacks #2 Rank
(short-term Buy rating). We are maintaining our long-term Neutral
recommendation on the stock. One of AFC’s primary competitors,
BJ's Restaurants Inc. (BJRI), currently retains
Zacks #1 Rank (short-term Strong Buy rating).
AFC ENTERPRISES (AFCE): Free Stock Analysis Report
BJ'S RESTAURANT (BJRI): Free Stock Analysis Report
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