Famous Dave's Beats by a Penny - Analyst Blog
May 03 2011 - 7:30AM
Zacks
Minnetonka, Minnesota-based
Famous Dave's of America, Inc. (DAVE) recently
reported first quarter 2011 adjusted earnings of 15 cents per
share, which surpassed the Zacks Consensus Estimate by a penny and
was in line with the prior-year quarter earnings.
Famous Dave’s, which owns,
franchises and operates restaurants in the U.S, reported total
revenue of $37.1 million, up 13.8% year over year. Total
revenue was in line with the Zacks Consensus Estimate. The upside
in revenue was attributable to higher comparable sales at
company-owned restaurants (up 3%), partially offset by a drop of
0.1% at franchised restaurants.
During the quarter, company-owned
restaurants sales climbed 15.3% to $32.7 million, due to improved
economic conditions, which resulted in higher consumer spending
despite a price increase of 2.0%. Moreover, franchise royalty
revenue was $4.0 million, flat year over year as higher sales from
additional seven franchised restaurants were offset by the two
month royalties lost from eight New York and New Jersey restaurants
that were divested and lower comps growth.
Operating income plummeted 53.0% to
$2.1 million in the reported quarter, due to a significant rise in
total expenses.
Store Update
During the quarter, the company
opened 3 as well as closed 3 franchised restaurants. At the end of
the first quarter, the company’s portfolio boasts of 182
restaurants, including 52 company-owned restaurants and 130
franchise-operated restaurants, located in 37 states.
Financial
Position
Famous Dave's ended the quarter
with cash and cash equivalents of $2.8 million and shareholders’
equity of $32.0 million.
During the quarter, company also
repurchased approximately 0.2 million shares, at an average price
of $10.28.
Outlook
For fiscal 2011, the company
expects to open 10 to 12 new restaurants and plans capital
expenditure of $5.5 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 be able to generate
improved earnings. However, estimates have not budged in the last
30 days, indicating the absence of any near-term catalyst. The
Zacks Consensus Estimates for 2011 and 2012 are pegged at 73 cents
and 91 cents, respectively.
One of Famous Dave's primary
competitors, Buffalo Wild Wings
Inc.’s (BWLD) first quarter 2011 earnings
of 81 cents per share exceeded the Zacks Consensus Estimate of 73
cents on higher same-store sales growth and lower wing costs.
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.
BUFFALO WLD WNG (BWLD): Free Stock Analysis Report
FAMOUS DAVES (DAVE): Free Stock Analysis Report
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