restaurant industry stock picks presented by: team cant chris grenert -- andrew hartman -- nikki...
TRANSCRIPT
Restaurant Industry Restaurant Industry Stock PicksStock Picks
Presented by: Team CANTChris Grenert -- Andrew Hartman -- Nikki Hardin -- Tara Grove
Industry Overview:Industry Overview:Restaurant Industry
◦Issues◦Valuation
Factors Used to Pick Top Five Stocks◦Diversification◦Future Strategies◦Debt Ratios◦Operating Margins
Debt RatiosDebt Ratios
Current Ratio = Current Assets Current Liabilities
Quick Ratio = Current Assets - Inventories Current Liabilities
Debt Ratio = Total Liabilities Shareholder’s Equity
Operating Margins:Operating Margins:Return on Assets (ROA) = Net Income Total Assets
Return on Equity (ROE) = Net Income Shareholder’s Equity
EBT= Revenue - Expenses (excluding tax)
StarbucksStarbucksDiversification:
◦ 11,000 Stores Domestically
◦ 4,500 Stores Internationally
◦ 1,175 US Stores Opening Next Year
◦ 975 Stores Opening This Fiscal Year
◦ 14% International Annual Growth Over Next 9 Years
◦ 37,000 Stores Expected by 2017
StarbucksStarbucks
Strategy:
◦Focus On Customer Experience in Stores
◦Better Employee Training Tools
◦ Include new products and store designs
◦Management is Slowing US Growth Due to Underperformance
◦Plans to Accelerating Growth Abroad
StarbucksStarbucksDebt Ratios
Operating MarginsIndustry Average 2006 2007 Latest Quarter
ROA 8.1 14.21 13.77 8.96
ROE 27.2 26.93 29.81 19.39
EBT 18.5 11.6 11.2 6.9
Industry Average 2006 2007 Latest Quarter
Current Ratio .3 .79 .79 .80Quick Ratio .3 .35 .34 .31Financial Leverage
4.1 1.99 2.34 2.24
Debt/Equity 1.52 0 .24 .22
Panera BreadPanera Bread
Diversification:
◦Operations in 38 US States
◦Currently 1252 Stores
Panera BreadPanera BreadStrategies:
◦Boost Profitability Through: Menu Management Retail Pricing Initiatives
◦Introduce New Sandwiches
◦Expand Advertisements
◦Improve Operations
Panera BreadPanera BreadDebt Ratios
Operating Margins
Industry Average 2006 2007 Latest QuarterROA 8.1 12.01 9.26 9.46ROE 27.2 16.47 13.62 13.19EBT 18.5 11.2 8.3 7.7
Industry Average 2006 2007 Latest Quarter
Current Ratio .3 1.16 1.19 .71
Quick Ratio .3 .94 1.00 .42
Financial Leverage
4.1 1.36 1.57 1.44
Debt/Equity 1.52 .19 .17 .04
McDonaldsMcDonalds
Diversification:
◦31,489 Restaurants in 118 Countries
◦Income from Operations: 47% United States 40% Europe 13% Middle East and Africa
Strategies:◦Increase sales:
Double drive through Extended Hours Restaurant Remodeling Cashless Payment System
$11 Billion Return to Shareholders in 2008 through buybacks and dividends
McDonaldsMcDonalds
McDonaldsMcDonalds
Debt Ratios
Operating Margins
Industry Average 2006 2007 Latest QuarterCurrent Ratio .3 1.21 .8 1.28Quick Ratio .3 1.01 .67 1.12Financial Leverage
4.1 1.88 1.92 2.09
Debt/Equity 1.52 .54 .48 .71
Industry Average 2006 2007 Latest QuarterROA 8.1 12.01 8.2 15.06ROE 27.2 23.16 15.58 30.17EBT 18.5 19.3 15.7 24.8
YUM- YUM- KFC, Taco Bell, Pizza Hut, etc.KFC, Taco Bell, Pizza Hut, etc.
Diversification:
◦35,500 Companies
◦100 Countries
◦3,100 Restaurants in China
◦Expected to Increase Up to 20,000 in 2017
YUMYUMStrategy
◦International Expansion Includes: China Europe India Russia
◦Improve Operations
◦Add Sales Layers to Each Brand
YUMYUMDebt Ratios
Operating Margins
Industry Average 2006 2007 Latest Quarter
ROA 8.1 13.68 13.37 14.77
ROE 27.2 57.10 70.57 110.85
EBT 18.5 11.6 11.4 11.4
Industry Average 2006 2007 Latest Quarter
Current Ratio .3 .52 .72 .67
Quick Ratio .3 .32 .49 .32
Financial Leverage
4.1 4.42 6.36 18.63
Debt/Equity 1.52 1.42 2.57 9.83
ChipotleChipotleDiversification:
◦140 Restaurants Open Annually
◦2100 Stores Expected by 2017
◦75 Metro Areas in United States
◦Only one in Canada located in Toronto
ChipotleChipotle
Strategies:
◦Possible Expansion to International Markets
◦Spread Stores Apart
◦Has considered long-term growth stock
ChipotleChipotle
Debt Ratios
Operating Margins
Industry Average 2006 2007 Latest Quarter
Current Ratio .3 2.92 2.75 2.96Quick Ratio .3 2.59 2.54 2.72Financial Leverage
4.1 1.27 1.28 1.31
Debt/Equity 1.52 0 0 0
Industry Average 2006 2007 Latest QuarterROA 8.1 8.31 10.64 10.4ROE 27.2 10.58 13.62 13.47EBT 18.5 8.3 10.5 10.0
Top Five StocksTop Five Stocks
5. Starbucks
4. Panera
3. McDonalds
2. YUM
1. Chipotle
Any Questions?Any Questions?