On Monday (NASDAQ:MNDY), BMO (TSX:BMO) Capital Markets adjusted its outlook on shares of Bloomin' Brands (NASDAQ:BLMN), reducing the price target from $20.00 to $16.00, while retaining a Market Perform rating on the stock. The adjustment follows the company's recent earnings report and future earnings guidance.
The analyst from BMO Capital noted that the third-quarter results from Bloomin' Brands were slightly below expectations, but the larger concern was the significant downward revision of the earnings per share (EPS) forecast. The revision has prompted a reduction in estimates that extends through 2025, with the price target correspondingly lowered to $16.00.
Despite a modest beat on EPS for the quarter, with $0.21 per share exceeding the consensus by $0.01, this was overshadowed by tax benefits which mitigated weaker comparable sales and margins. The company's announcement of lowered EPS guidance for 2024 by approximately 20% was a key factor in the analyst's reassessment.
Bloomin' Brands also disclosed a refranchising strategy in Brazil, which is part of its broader operational updates. However, the analyst expressed a desire for a more significant strategic shift, particularly under the guidance of the new CEO, to bolster investor confidence and improve the performance of its Outback Steakhouse brand.
The analyst concluded by pointing out that while Bloomin' Brands shares are currently trading at a low price, a clearer and more compelling strategy is required to make the stock a more attractive investment proposition.
In other recent news, Bloomin' Brands reported a decline in its fiscal third-quarter 2024 revenue and earnings per share (EPS). The company's Q3 revenues fell by 4% year-over-year to $1 billion, and the adjusted diluted EPS was $0.21, down from $0.41 in 2023. The company also revised its full-year 2024 guidance, projecting an adjusted diluted EPS between $1.72 and $1.82.
Piper Sandler responded to these results by reducing its price target for Bloomin' Brands from $20.00 to $16.00, maintaining a neutral rating on the stock. The firm noted a 1.5% decline in U.S. same-store sales (SSS) for the quarter, a figure that included a 4.4% decrease in traffic.
In addition to these financial developments, Bloomin' Brands confirmed Mike Spanos as the new CEO and announced a re-franchising transaction for its operations in Brazil. The company also highlighted its focus on enhancing guest experiences and expanding its Carrabba's brand.
Despite facing increased labor wage inflation of 3.8% and higher operating expenses, Bloomin' Brands has repurchased 10.1 million shares for $266 million year-to-date. These are some of the recent developments for the company.
InvestingPro Insights
InvestingPro data and tips offer additional context to Bloomin' Brands' current financial situation, aligning with the analyst's cautious stance. The company's market cap stands at $1.29 billion, with a concerning P/E ratio of -244.51, indicating recent profitability challenges. This is further supported by an InvestingPro Tip highlighting that Bloomin' Brands has not been profitable over the last twelve months.
The company's dividend yield of 6.34% is notable, with an InvestingPro Tip confirming that Bloomin' Brands "pays a significant dividend to shareholders." However, this should be viewed cautiously given another tip stating the company "operates with a significant debt burden" and that "short-term obligations exceed liquid assets."
Aligning with the BMO analyst's concerns about the stock's attractiveness, an InvestingPro Tip notes that the "stock has taken a big hit over the last six months," with data showing a -32.71% price total return over that period. This decline is even more pronounced year-to-date at -44.43%.
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.
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