Bojangles Valuation (NASDAQ: BOJA – Part 3)

Hello from Spain and welcome to the third part of Bojangles Valuation!
You can read the second part just clicking here:

http://www.financialcoding.com/index.php/2018/12/16/bojangles-valuation-nasdaq-boja-part-2/

I know that in the previous post I said I would show you a DCF valuation, but I am involved in several projects and I would need more time to do it. But no worries! In this post we will do a valuation through Valuation Multiples.

Some value investors say that doing a DCF valuation is useless because doing a DCF we are working as a fortuneteller, and the people are not able to predict the future yet. On the other hand, I think doing a DCF is a quite interesting exercise where we could discover quite interesting things.

Let’s start! As we saw in the second part of the valuation our Company was the Company with the lower EV/EBIT multiple:

As we can see, the sector multiple is equals to 18,98x. Now, let’s calculate the Enterprise Value with that value:

Bojangles EBIT = 52,34 M$
Sector EV/EBIT = 18,98x
EV = 52,34 M$ * 18,98 = 993,41 M$

 

Now we have the Enterprise Value, but we need to know the Equity Value and the number of shares outstanding in order to get the share Price. Let’s calculate the Net Debt:

Cash & Cash Equivalents = 14.052 k$
Long-Term Debt = 123.376 k$
Net Debt = 109.324 k$

 

Perfect! Now we can calculate the Equity Value just like this:

Enterprise Value = 993,41M$
Net Debt = 109,324 M$
Equity Value = 884,086 M$

 

Finally, we just need to know the number of shares outstanding to know the share Price:

Equity Value = 884,086 M$
Number of Shares Outstanding = 36.838 shares
Share Price = 23,9$ per share

 

We can see how with the full year 2017 data we get a share price equals to 23,9$. (Bojangles is currently trading at 16,08 USD)

Actually, if you see the last quarterly Bojangles report, Bojangles has a negative EBIT. At this point we should look into more detail about that data. Why is EBIT negative? Is it a punctual problem or will it be a long-term problem?

Finally, it is said that interest rates will raise this 2019. In that case, Bojangles could have to pay higher interest for their debt and we should see if he would be able to pay it.

I will talk about all those questions in the next post with the DCF valuation

And remember, this post is just an opinion, if you buy shares you will do it under your responsibility.

Hope you enjoy it!

See you soon

Simón

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