On Wednesday, Stifel reiterated its Buy rating on Driven Brands (NASDAQ: DRVN) with a consistent price target of $20.00. The firm's analysis followed the company's recent report and included updated projections for the business. Stifel's forecast for the fiscal year 2024 (FY24) revenue is set at $2.34 billion, slightly below the consensus of $2.35 billion from other analysts.
The firm's expectations are based on a steady performance in Driven Brands' Maintenance segment, particularly citing the impact of Take 5 Oil Change. Additionally, a continued stabilization in the U.S. Car Wash segment is anticipated to contribute to the company's overall performance.
Stifel's projections also take into account the recent sale of Driven Brands' Canadian distribution business, which is reflected in the FY24 revenue forecast. Despite this divestiture, the firm's outlook for Driven Brands' financials remains positive.
Furthermore, Stifel has maintained its earnings per share (EPS) estimate for fiscal year 2025 (FY25) at $1.15. The $20.00 twelve-month price target (TP) is based on these estimates, signaling confidence in the company's ability to reach the projected financial milestones.
In summary, Stifel's analysis suggests a stable outlook for Driven Brands, with key segments expected to support the company's growth and financial targets in the coming years. The firm's reiteration of the Buy rating and price target reflects this positive expectation for the company's future performance.
In other recent news, Driven Brands reported a modest rise in its Q3 2024 revenue, clocking in at $592 million, a 2% increase from the previous year, alongside adjusted EBITDA of $138.8 million. This comes amid the company's 15th consecutive period of same-store sales growth, bolstered by the addition of 56 new stores and a 1.1% increase in same-store sales. The company's Take 5 Oil Change segment continued to shine, marking its 17th consecutive quarter of positive same-store sales growth.
In other developments, the company has successfully sold its Canadian distribution business, contributing to debt reduction efforts. Furthermore, Driven Brands has plans to open approximately 170 new units in 2024, primarily through franchising. The company also aims to decrease its leverage ratio to below three times by the end of 2026.
As for future expectations, Driven Brands anticipates full-year 2024 revenue to fall between $2.33 billion and $2.43 billion, with adjusted EBITDA expected to range from $529 million to $559 million. Despite facing operational challenges due to severe weather, the company remains focused on achieving its financial outlook, managing debt effectively, and optimizing its portfolio to support long-term growth.
InvestingPro Insights
Driven Brands' recent performance aligns with Stifel's positive outlook, as evidenced by InvestingPro data. The company's market capitalization stands at $2.67 billion, reflecting its significant presence in the automotive services industry. With a revenue of $2.33 billion in the last twelve months as of Q3 2023, Driven Brands is closely tracking Stifel's FY24 revenue projection of $2.34 billion.
The company's financial health is further underscored by its adjusted P/E ratio of 12.28, suggesting a reasonable valuation relative to earnings. This metric, combined with a PEG ratio of 1.16, indicates that the stock may be fairly valued considering its growth prospects.
InvestingPro Tips highlight additional strengths:
1. Driven Brands has demonstrated strong revenue growth, with a 32.09% price return over the past year.
2. The company's gross profit margin of 42.25% indicates efficient cost management, supporting Stifel's positive outlook on segments like Maintenance and Car Wash.
These insights complement Stifel's analysis, reinforcing the potential for Driven Brands to meet or exceed financial expectations. InvestingPro offers 13 additional tips for DRVN, providing investors with a comprehensive view of the company's prospects.
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