Why Bloomin' Brands (BLMN) Is Down Today

NEW YORK (TheStreet) -- Bloomin' Brands (BLMN) was falling 1.6% to $24.30 Wednesday following the pricing of its 18 million share secondary offering.

The restaurant operator announced that it will price its 18 million share secondary offering at $24.50 a share. The offering is expected to close on March 10, 2014. Bloomin' Brandssaid the underwriters will have a 30-day option to purchase up to 2.7 million additional shares of common stock from certain selling stockholders.

The underwriting group for the offering is led by Bank of America-Merrill Lynch, Morgan Stanley, JP Morgan, Deutsche Bank, and Goldman Sachs.

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TheStreet Ratings team rates BLOOMIN' BRANDS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate BLOOMIN' BRANDS INC (BLMN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 5.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 206.66% and other important driving factors, this stock has surged by 43.29% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although BLMN had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • BLOOMIN' BRANDS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, BLOOMIN' BRANDS INC increased its bottom line by earning $1.63 versus $0.40 in the prior year. For the next year, the market is expecting a contraction of 24.5% in earnings ($1.23 versus $1.63).
  • The debt-to-equity ratio is very high at 2.94 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • The gross profit margin for BLOOMIN' BRANDS INC is rather low; currently it is at 15.55%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.61% trails that of the industry average.
  • You can view the full analysis from the report here: BLMN Ratings Report

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