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2017 - Smart Investing Newsletters
- 3/14/17; St. Patty Stocks Not So Lucky
- 3/7/17; College Conundrums Clarified
- 2/28/17; What is True Financial Planning and Why Should You Care?
- 2/21/17; Can Biogen Inc. (BIIB) be the Cure to your Portfolio?
- 2/14/17; Is it Time to Fall in Love with these Stocks?
- 2/7/17; Is Whirlpool (WHR) Ready to Whirl Higer?
- 1/31/17; These Companies May Benefit from the Super Bowl, but Will They Benefit Your Portfolio?
- 1/24/17; Is BorgWarner (BWA) Set to Rev Higher in 2017?
- 1/17/17; Trend Investing; Only a Part of the Process
- 1/10/17; Has DOW 20,000 Come Too Soon?
2016 - Smart Investing Newsletters
- 11/29/16; With Holiday Sales Eyeing a Record, Can FedEx Transport your Portfolio Higher?
- 11/22/16; The $1 Trillion shortfall in state pensions; And is CVS a buy for your portfolio?
- 11/1/16: Understanding the Numbers Behind GDP
- 10/25/16; Are you getting bad money advice from friends & family?
- 10/18/16; Uncertainties over Trump/Clinton Presidencies could delay CFO spending
- 10/11/16; Concerns at Wells Fargo carry over to Wells Fargo Advisors
- 10/4/16; Battle of the sexes: Who makes worse investment decisions?
- 9/27/16; Can Buffalo Wild Wings add some spice to your portfolio?
- 9/20/16; Why it's important to rollover old 401ks into an IRA
- 9/13/16; Should the Fed increase rates at the September meeting?
- 9/6/16; Ireland says no to Apple's $14.5 Billion back tax
- 7/27/16; No Newsletter
- 7/19/16; Roth or traditional: What works best for you?
- 7/12/16; Target date funds are not right for you!
- 7/5/16; Holiday, No Newsletter
- 6/28/16; Can this correction facility provide discipline to your portfolio?
- 6/14/16; Best Buy (BBY): Can this company be the best buy for your portfolio?
- 6/7/16; Wendy's: Will this fast food company get you fast returns?
- 5/31/16; No Newsletter
- 5/24/16; Thinking about investing in the name Carl Ichan?
- 5/17/16; How to hedge or insure your stock portfolio
- 5/10/16; Understanding market capitalization and which may get the highest return
- 5/3/16; Amazon vs. Bed Bath & Beyond: How to compare values of companies
- 4/26/16; Marriott: A great place to stay, but is it a great place to invest?
- 4/19/16; Banking companies could lend help to your investment portfolio
- 4/12/16; These companies that have filed bankruptcy wil surprise you
- 4/5/16; Negative effects of society on investor psychology
- 3/29/16;The problems with remaining dovish on the economy
- 3/22/16; No Newsletter
- 3/15/16; Can Valeant Pharmaceuticals Cure Itself?
- 3/8/16; Disney: A magical company, but is it a magical investment?
- 3/1/16; Nordstrom: Is the risk worth the reward?
- 2/23/16; Amazon: Understanding the numbers behind what you own
- 2/16/16; Norfolk Southern Corporation (NSC):On the right track
- 2/9/16; Netflix: With a fall of nearly 30% this year, could there be a buying opportunity?
- 2/2/16; Banks are on sale, It's time to buy!
- 1/26/16; No, the markets are NOT overvalued, and here's why!
- 1/19/16; Chevron proves to be a fundamentally strong oil company worth keeping in your portfolio
- 1/12/16; It's not too late to learn your lesson from the bankruptcy filing of Arch Coal, ACI
- 1/5/13; The movie "The Big Short" hits a home run in being somewhat informative
2015 - Smart Investing Blogs
- 12/29/15; No Newsletter
- 12/22/15; No Newsletter
- 12/15/15; It pays to ask questions in the world of finance
- 12/8/15; No Newsletter
- 12/1/15;Spending the time going over the numbers is worth it
- 11/24/15; Robo-Advisors: Money-maker or investment mistake?
- 11/17/15; Consequences of holding a stock for to long
- 11/10/15; What could a Fed Rate Hike mean for your portfolio?
- 11/03/15; GoPro: An example of why you should learn from history
- 10/27/15; Don't get scared off by oil companies
- 10/20/15; Understanding the rules of randomness
- 10/13/15; Mutual funds may not be your best option
- 10/6/15; Look out for "Financial Planners" and "Wealth Investors" who aren't concerned with clients' investment returns
- 9/29/15; The millennial generation has it all wrong when it comes to investing
- 9/22/15; Ignore the hype -- research health, biotech stocks carefully
- 9/15/15; Why my investment firm is different
- 9/1/15; Volatile markets, stop-loss orders and goodbye
- 8/25/15; Jobless statistics by the numbers
- 8/18/15; Get ready for Tesla stock shock!
- 8/11/15; How long will people collect on long-term care policies?
- 8/4/15; Investing in 3-D printing takes patience
- 7/28/15; Buy high, sell low? Investors let their emotions control strategy
- 7/21/15; There's no treasure in Alibaba stocks
- 7/7/15; Educate yourself on the shell games of Wall Street
- 6/30/15; A Greek deafult would sting but not burn
- 6/23/15; Bonds too risky to qualify as a safe investment
- 6/16/15; No Newsletter
- 6/9/15; Real estate investment isn't always a good deal
- 6/2/15; Michael Kors: A luxury brand to consider
- 5/26/15; Beware master limited partnerships' taxes
- 5/19/15; You've got debt: Verizon, AOL merger a risky buy
- 5/12/15; No Newsletter
- 5/5/15; Starbucks stock is grounds for concerns
- 4/28/15; Mutal funds, ETFS too faulty to be reliable
- 4/21/15; A scan of 3D Systems shows money is better spent elsewhere
- 4/14/15; Company had warning signs before '60 Minutes'
- 4/7/15; Tesla's pretty cars belie it's unsightly numbers
- 3/31/15; Builder of Homes Could Build Your Portfolio
- 3/24/15; Don't Trust First Trust Deeds
- 3/17/15; No Newsletter
- 3/10/15; "I am happy to say, "I survived an SEC audit"
- 3/3/15; Don't get caught in emotional hype of IPOs
- 2/24/15; Stocks are risky when investors don't do their research
- 2/17/15; Holiday - No Newsletter
- 2/10/15; Investment advisors through the decades
- 2/3/15; Avoid taking a bite out of Sysco stock
- 1/27/15; Share happiness, not just Coke stock
- 1/13/15; Think three steps ahead in energy investment
- 1/6/15; 2015 is looking good, but watch out for 2016!
2014 - Smart Investing Blogs
- 12/30/14; Holiday - No Newsletter
- 12/23/14; Holiday - No Newsletter
- 12/16/14; Terex Corp. ($TEX) has many positives for investors
- 12/9/14; As Oil Prices Drop, Keep a Sharp Eye on Energy Stocks
- 11/25/14; Nasdaq 2002 & Nasdaq Today: Apples and Oranges!
- 11/18/14;Possible troubles overseas makes Qualcomm less attractive
- 11/11/14; Research companies before you invest
- 11/4/14; Amazon delivers but not in earnings
- 10/28/14; No Newsletter
- 10/21/14; Don't fear current volatility; think ahead instead
- 10/14/14; Halloween aside, October is not a scary month
- 10/7/14; Economy is recovering and profits are rising
- 9/30; Molycorp too risky to recommend for an investment
- 9/23/14; No Newsletter
- 9/16/14; Flagstar might not be the best to bank your investments on
- 9/9/14; Don't rely on predictions - Be disciplined with your stocks
- 8/19/14; OK to shop at Abercrombie & Fitch - Just DON'T buy the company
- 8/12/14; Insurance Firms, Expeditors (EXPD) are not bargain buys
- 8/5/14; 3-D Printer Stock Risk Not Worth the Reward
- 7/29/14; FORE! Callaway Golf performance under par for investors
- 7/22/14; Momentum stocks lend false sense of security
- 7/15/14; Beware of shock if you hold Sempra stock
- 7/8/14; Holiday - No Newsletter
- 7/1/14; Refineries may be a good buy for the right investor
- 6/24/14; Big 5 Sporting Goods isn't a slam dunk but it's worth a look
- 6/17/14; Boise Cascade may fit the requirement of a company with better valuations
- 6/10/14; The company you work for may be fine but not for investment purposes
- 6/3/14; Study the jobs report, but don't try to be an expert investor
- 5/20/14; Today's Lesson: Avoid Private REITS
- 5/13/14; Not all parties are a good time -- it's ok to skip them sometimes
- 5/6/14; If you wouldn't buy it today, then sell it!
- 4/29/14; Investors shouldn't sweat market pullback - PetSmart worth a look
- 4/22/14; GM Looking Promising Down the Road
- 4/15/14; Trading in highfliers is only investing in fantasy
- 4/8/14; There are no absolutes with company share buybacks
- 4/1/14; GameStop stocks that could even suit Janet Yellen
- 3/11/14; Sometimes a burrito is just a burrito
- 3/4/14; What wealthy investors are doing
- 2/25/14; Behind the smoke and mirrors
- 2/11/14; The future of fracking could help Baker Hughes
- 2/4/14; Don't let short-term issues trigger your alarm bells
- 1/28/14; Watching the housing market?
- 1/21/14; Stay on top of 401(k) options
- 1/14/14; Invest in patience
Does Brinker International (EAT) Look Appetizing?
Tuesday, March 21st, 2017
Brinker International is in the services sector and restaurants industry. The company owns, operates, and franchises Chili’s Grill and Bar and Maggiano’s Little Italy restaurants
The current price for EAT is $42.44 and the 52-week range is $40.92 - $55.84.
Looking at the valuation ratios, many compare favorably to the industry average. The current Price/Earnings ratio is 13.26, which is below the industry average of 24.77. This is a positive as we like to see valuation ratios below the industry average as it demonstrates we are getting a good value for that given metric. Price/Sales of 0.64 is well below the industry average of 2.41. Price/Cash Flow of 6.24 is more than half the industry average of 15.93.
An area of concern would be the company’s Price/Tangible Book value as it is not material. Even adding back the intangible assets to the book value, we still see there’s negative equity of $530.6 million.
By researching various restaurant companies in the past, we have seen companies of this nature be asset light due to a heavy franchising model. This does not appear to be the case with Brinker as the company owns most of its restaurants. As of the most recent quarter it owned 949 Chili’s and 52 Maggiano’s, while it franchised a total of 657 Chili’s. Although the company doesn’t have a heavy franchising model, it still appears to be asset light as it owns the land and buildings at only 190 of the 1,001 company owned restaurants.
Although the company is asset light, it still has debt of $1.4 billion on the balance sheet. With little in large assets on the balance sheet, one must question why the company has so much debt. One potential reason is the company may have issued debt to buy back stock. In 2016, the company repurchased $278.8 million worth of stock, and thus far in 2017 it has repurchased $346.2 million worth of stock.
When analyzing these asset light companies and their debt it is important to look at the debt covenants, the cash flow, and when the debt will be coming due. All this information can be found in the 10-Qs and 10-Ks of the company.
Brinker pays a nice dividend of 3.2% and only uses 41.5% of its earnings to pay out that dividend. This is a positive as the company has the capability to increase the dividend, without using too much of its earnings.
Sales have fallen by 2.2% quarter over quarter versus the industry average which has seen growth of 0.9%. Sales have seen an increase of 4.4% year over year versus the industry average which has fallen by 5.3%.
EPS growth looks to have some questions as it has fallen 13.8% quarter over quarter versus the industry average declining by 7.7%. Looking year over EPS fell 1.9%, while the industry average increased 11.5%.
Looking forward to June 2018 and using a forward multiple of 16.5, estimated GAAP EPS of $3.37 gives us a target sell price of $55.61. While this is 31% away from the current price, there is further research that should be conducted before buying this company. The main concerns here would include the questions related to the high debt level and negative equity.
Do you have a question or a company you'd like us to take a look at? Email us at Brent@WilseyAssetManagement.com or Chase@WilseyAssetManagement.com.
Brent Wilsey is president of Wilsey Asset Management and can be heard every Saturday at 8am and Sunday at 5pm on KFMB AM760.
Chase is a financial analyst for Wilsey Asset Management and can be heard every Saturday at 8am and Sunday at 5pm on KFMB AM760 as the co-host for the Smart Investing show with his father Brent Wilsey. Information is provided by Reuters.