Bojangles Valuation (NASDAQ: BOJA – Part 1)

Hello from Spain and welcome to the first part of my first Company Valuation!

Doing some research about a Company to study, I found a Company called Bojangles (NASDAQ: BOJA). I chose Bojangles because I think it is Business easy to understand (Restaurant industry). Furthermore, their Stock Price went from 21,95US to 16,1USD, and their ROE is currently equals to 29%. So, I thought it would be interesting to take a look!

Let’s Start!

As I said, Bojangles was trading at 21,95USD in 2018, their are currently trading at 16,1USD. I mean, Bojangles Stock Price is 26,65% lower. It could be an opportunity to buy a stock 26,65% cheaper. In the next parts of the valuation you will see if I think is a good opportunity to buy stocks or not. It will be an opinion, so, if you buy stocks is under your responsibility.

We can see that the stock Price went down in the next picture:

There is another interesting point, the P/E ratio. In this case, Bojangles has a P/E ratio equals to 11,63. If we look at Damodaran’s page, the current P/E for Restaurant/Dining industry is equals to 37,5. That means that if Bojangles is a good Business, we could have an upside.

Ok, now that we know a bit of the situation of Bojangles, let’s see the Company Overview:

  1. Bojangles’ is a highly differentiated and growing restaurant operator and franchisor dedicated to serving customers high-quality, craveable food made from their Southern recipes.
  2. Their core menu centered on “chicken and biscuits” has remained largely unchanged.
  3. Bojangles’ is known for its breakfast menú, which is served all day, every day, and includes their popular Cajun Filet Biscuit. They also offer hand-breaded, bone-in chicken marinated for at least 12 hours.
  4. They support their Brand through high profile sponsorships of sporting events and venues, such as the Bojangles’ Southern 500, as well as endorsement from celebrities who are fans of Bojangles.
  5. They locate their restaurants in places that are easily accesible and convenient to customers’ homes, places of work and daily commutes. The also strive to deliver their food quickly to their customers whether in their restaurants of through the drive-thru.
  6. They believe royalties and fees generated from their franchise base provide them with significant, predictable cash flow to invest in executing their strategies.
  7. Their marketing strategy centers on their “It’s Bo Time” campaign, which highlights the craveability and made-from-scratch quality of their food.
  8. Their typical full-size restaurant is a modern, free-standing building which is approximately 3,900 square feet in size and can seat approximately 70 customers. Their restaurants include a drive-thru window and approximately 45 parking spaces.
  9. Bojangles’ Express restaurants are located in or attached to another business or other structures such as shopping malls, food courts, travel plazas, grocery stores, college campuses, airports, transportation centers, military bases or convention centers or sports arena and may be as small as 800 square feet and as large as 3,800 square feet.
  10. Their strategic plan targets opening both Company-operated and franchised restaurant units, increasing comparable restaurant sales and growing Average Unit Volumes (AUVs).
  11. Their expansión into new markets typically follows a pattern over the long term of increasing AUVs as more consumers “discover” Bojangles’ and become loyal to our Brand and food.
  12. They use a franchising strategy to increase new restaurant growth, leveraging the ownership of entrepreneurs with specific local market expertise and requiring a relatively minimal capital commitment by them.
  13. They also support their growth by attracting highly qualified and experienced new franchisees.
  14. They use multiple marketing channels, including televisión, radio, print advertising, billboard advertising, internet and social media and loyalty programs to broadly drive Brand awareness and traffic to their restaurants.

Well, now that we have a better idea about Bojangles, let’s see some interesting data:

Bojangles has currently 764 restaurants in the USA, but, they are all located in the East of the USA. As we can see in the map, they have a lot of places to grow only in the USA! So, it could mean that they could have a high % of growth during their expansion years.

In the next picture, we will see the growth in number of restaurants from 2015 to 2017:

As we can see, they are focused on their growth in Franchised restaurants, but they don’t forget to grow with Company-Operated restaurants. As we can see, they have grown from 662 restaurants in 2015 to 764 restaurants in 2017.

Now that we have seen that they are consistently growing in the number of restaurants, let’s see how they are growing in revenues:

We can see that Revenues has grown from 375,2 MUSD in 2013 to 560 MUSD in 2018 (3Q). That mean that Bojangles has had a CAGR equals to 7,85% from 2013 to 2017.

The data we have seen in this first part looks so good, but, we have to take into account that the results in the past means nothing. It could be totally different in the future, but the data we have seen reflects a growth.

In the second part of the valuation we will see the Bojangles´ competitors, more data and we will compare our Company with their competitors.

Hope you enjoy it and see you in the second part of my first valuation!

Simón

 

Deja un comentario

Tu dirección de correo electrónico no será publicada. Los campos obligatorios están marcados con *