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Analyst retains Neutral on Bloomin' Brands, highlights first call with new CEO Mike Spanos

EditorAhmed Abdulazez Abdulkadir
Published 11/12/2024, 04:56 AM
BLMN
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On Monday, Piper Sandler adjusted its outlook on Bloomin' Brands (NASDAQ:BLMN) by reducing the price target to $16.00 from the previous $20.00, while maintaining a Neutral rating on the stock. The revision follows the company's third-quarter earnings report released on Friday, which indicated challenging results, including a decline in U.S. same-store sales (SSS) of 1.5% for the quarter. This figure included a 4.4% decrease in traffic.

The company also provided guidance for the fourth quarter of 2024, projecting SSS to fall between 1 to 2%, a forecast that falls short of the pre-earnings consensus estimate of an approximate 0.4% increase. Consequently, Bloomin' Brands has significantly lowered its full-year 2024 adjusted earnings per share (EPS) guidance. The market responded to these announcements with Bloomin' Brands' stock price falling 9.7% on Friday.

Despite the less than favorable quarterly performance and future projections, there were positive developments mentioned by the analyst. The company has now confirmed Mike Spanos as the new CEO, providing clarity on its leadership. Additionally, Bloomin' Brands announced a re-franchising transaction for its operations in Brazil, although details were not specified in the context provided.

Furthermore, management has promised a detailed plan for the Outback U.S. brand to be revealed during the next earnings call. However, the announcement was met with some disappointment due to the delay in presenting this strategic plan. The next earnings call will be closely watched for the outlined strategy, which stakeholders anticipate will address the current challenges faced by the brand.

In other recent news, Bloomin' Brands, the parent company of Outback Steakhouse, reported a decrease in its fiscal third-quarter 2024 revenue and earnings per share (EPS). The company cited challenges such as impacts from hurricanes and rising operating expenses as contributing factors. Despite a decline in U.S. comparable restaurant sales, Bloomin' Brands is focusing on enhancing guest experiences and expanding its Carrabba's brand. It also announced a strategic partnership with Vinci (EPA:SGEF) Partners for its Brazil operations, aiming for a greater focus on domestic markets.

Q3 revenues declined by 4% year-over-year to $1 billion, and adjusted diluted EPS for Q3 was $0.21, a decrease from $0.41 in 2023. The company's full-year 2024 guidance projects adjusted diluted EPS between $1.72 and $1.82. Bloomin' Brands declared a quarterly dividend of $0.24 per share. These are among the recent developments from the company's earnings call.

The company faces increased labor wage inflation of 3.8% and higher operating expenses. Adjusted operating margins decreased to 3% from 5.3% year-over-year. However, off-premises sales accounted for 23% of total U.S. sales, with third-party delivery growing to 13%. Bloomin' Brands also repurchased 10.1 million shares for $266 million year-to-date.

InvestingPro Insights

Recent data from InvestingPro sheds additional light on Bloomin' Brands' current financial situation, providing context to the analyst's revised outlook. The company's market capitalization stands at $1.29 billion, reflecting the recent stock price decline. Notably, Bloomin' Brands offers a significant dividend yield of 6.34%, which may appeal to income-focused investors despite the recent challenges.

InvestingPro Tips highlight that management has been aggressively buying back shares, potentially signaling confidence in the company's long-term prospects. However, this should be weighed against the fact that Bloomin' Brands operates with a significant debt burden and its short-term obligations exceed liquid assets.

The company's revenue for the last twelve months as of Q3 2024 was $4.55 billion, with a slight revenue decline of 0.55% over the same period. This aligns with the challenging same-store sales figures mentioned in the earnings report. The gross profit margin of 16.01% supports the InvestingPro Tip indicating that the company suffers from weak gross profit margins.

For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Bloomin' Brands, providing a deeper understanding of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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