Upload
marylou-weaver
View
227
Download
0
Tags:
Embed Size (px)
Citation preview
Mu RanNan LiangYa ZuoYang HanYuwei Hong December 1, 2011
Agenda
• Introduction • Macroeconomic and industry overview• Company and business overview • Relevant stock market prospects• Financial analysis • Multiple valuation • Financial projections• DCF valuation• Recommendation
Introduction
• The Cheesecake Factory– Upscale, casual, full-service dining restaurants
• Industry– Chain restaurants
• Selection reasons– Interests– Operations and management – Financial health – Few analyst coverage
Macroeconomic Overview
• Real GDP
Source: Capital IQ MacroEconomic 2011 Nov 30
Macroeconomic Overview
• Unemployment Rate
Source: Capital IQ MacroEconomic 2011 Nov 30
Macroeconomic Overview
• Consumer Confidence Index
Source: Capital IQ MacroEconomic 2011 Nov 30
Macroeconomic Overview
• Consumer spending
Data Source: ISIB Consumer Spending Report 2011
Industry Overview
• Chain Restaurant– Providing food services to patrons who order and are served while
seated (i.e. waiter or waitress service) and pay after eating– Products and services segmentations
– Major players
Source: ISIB Chain Restaurants in the US Industry Report 2011
Major Markets
• Income demographics • Age demographics
Data Source: ISIB Chain Restaurants in the US Industry Report 2011
Key Success Factors
Industry Performance
Declining industry’s revenue
growth rate in past few years
Data Source: ISIB Chain Restaurants in the US Industry Report 2011
• Industry’s annual revenue
Key External Drivers
Expected to increase slowly potential opportunity for the industry
Expected to increase slowly potential opportunity for the industry
Expected to increase threatens operators in the industry
Expected to increase potential threat to the industry
Expected to increase slowly potential opportunity for the industry
Data Source: ISIB Chain Restaurants in the US Industry Report 2011, ISIB Consumer sentiment index report, ISIB consumer spending report, ISIB households over $100,000 report, ISIB healthy eating index report
Industry Structure
• Barriers to Entry: Low• Competition Level: High• Concentration Level: Low• Life Cycle Stage: Mature• Revenue Volatility: Low• Capital Intensity: Medium• Industry Assistance: Low• Regulation Level: Medium• Technology Change: Medium• Industry Globalization: Low
Industry Trend
• Restaurants will offer new and healthy foods to survive in a competitive market
• The domestic market is increasingly becoming saturated. Therefore, some major operators are continuing to invest internationally through franchises
• Restaurants will continue to invest in technology, including electronic customer ordering, labor scheduling and electronic product ordering systems
US Bread Production Industry
• Manufactures bread and bakery products, such as cakes, muffins, pastries, pies and other similar baked goods.
Data Source: ISIB Bread Production in the US Industry Report 2011
Company OverviewEvolution
Data Source: Annual Report Fiscal 2011
Company OverviewBrief Description
The sale in 2010 is The sale in 2010 is $1,659,404 $1,659,404
Company OverviewBrands
Data Source: Annual Report Fiscal 2011
Company Overview Competitive Advantage
Data Source: Annual Report Fiscal 2011
Company OverviewFuture Expansion
Data Source: Annual Report Fiscal 2011
Company OverviewFuture Expansion
Data Source: Annual Report Fiscal 2011
Company Overview Risk Factors Analysis
Data Source: Annual Report Fiscal 2011
Stock OverviewHistory Price
Data Source: Capital IQ
Stock Overview 8 competitors
Data Source: Capital IQ
• No dividends– Past– future
• Stock Repurchase– 2008: 2.1 million– 2010: 9.6 million– 2011-2012
• Stock Options– Employees
Stock OverviewRelevant Policy
Data Source: Annual Report fiscal 2011
Financial AnalysisRevenues
Data Source: Annual Report fiscal 2011
2006 2007 2008 2009 2010Profitability Return on Assets % 6.8% 6.3% 4.9% 5.9% 7.7% Return on Equity % 11.4% 13.1% 11.6% 8.3% 13.8%
Margin Analysis Gross Margin % 41.2% 42.3% 40.9% 42.4% 42.8% SG&A Margin % 5.5% 5.6% 5.2% 5.9% 5.8% EBIT Margin % 8.1% 7.3% 5.6% 6.4% 7.7%
Asset Turnover Total Asset Turnover 1.3x 1.4x 1.4x 1.5x 1.6x Fixed Asset Turnover 2.0x 1.9x 1.9x 1.9x 2.1x Accounts Receivable Turnover 133.2x 131.5x 134.5x 134.1x 120.5x Inventory Turnover 38.8x 38.9x 40.3x 40.7x 42.0x
Long Term Solvency Total Debt/Equity 5.5% 40.0% 76.3% 30.2% 8.8% Total Debt/Capital 5.2% 28.6% 43.3% 23.2% 8.1% EBIT / Interest Exp. 56.9x 10.2x 6.1x 4.4x 7.6x EBITDA / Interest Exp. 85.1x 16.1x 11.1x 7.6x 11.9x
Financial AnalysisRatios
Data Source: Annual Report fiscal 2011
DuPont Analysis
2006 2007 2008 2009 2010tax burden 71.85% 70.00% 71.38% 73.48% 73.56%
interest burden 105.89% 95.36% 84.04% 69.60% 86.65%operating profit margin 8.12% 7.33% 5.43% 4.60% 7.73%
asset turnover 126.51% 131.93% 140.59% 153.05% 161.36%leverage 146.12% 203.54% 252.48% 202.81% 173.62%
ROE 11.42% 13.14% 11.55% 8.30% 13.80%
Data Source: Annual Report fiscal 2011
Comparable
• Brinker International Inc. (NYSE:EAT)• Market share: 4.4%• Industry Brand Names: Chili’s Grill &
Bar, On the Border Mexican Grill & Cantina and Maggiano’s Little Italy
• 1,550 restaurants
• Darden Restaurants, Inc. (NYSE:DRI)• Market share: 14.3%• Industry Brand Names: Red Lobster,
Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52
• 1,800 restaurants
Source: ISIB Chain Restaurants in the US Industry Report 2011
Comparable
• DineEquity, Inc. (NYSE:DIN)• Market share: 1.9% • Industry Brand Names:
Applebee’s Bar & Grill and IHOP• 2,000 Applebee’s restaurants• 1,500 IHOP restaurants
• P.F. Chang's China Bistro, Inc. (NasdaqGS:PFCB)
• Industry Brand Names: P.F. Chang's China Bistro and Pei Wei Asian Diner.
• 201 full service Bistro restaurants• 168 quick casual Pei Wei
restaurantsSource: ISIB Chain Restaurants in the US Industry Report 2011
Comparable
Buffalo Wild Wings Inc. (Nasdaq: BWLD)800 restaurants
Ruby Tuesday Inc. (NYSE: RT)746 restaurants
Panera Bread Co. (Nasdaq: PNRA) 1,467 bakery-cafes
Texas Roadhouse Inc. (Nasdaq: TXRH)350 restaurants
Data Source: Capital IQ
Public Comps Analysis
Data Source: Capital IQ
Public Comps Analysis
Data Source: Capital IQ
Recommendation
WACC=12.45%