NEW YORK (TheStreet) -- Einstein Noah Restaurant (BAGL) shares are up 50.4% to $20.14 on Monday after the company announced that it agreed to be acquired by JAB Holding for $20.25 per share, or approximately $374 million, a 47% premium over the stock's average three month trading price.
The chain bagel shop restaurant boasts more 855 locations in 42 states across the country, with stores including Einstein Bros and Manhattan Bagel.
Investment firm JAB also currently has majority stakes in fellow restaurants Peet's Coffee & Tea Inc. and Caribou Coffee Co.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
TheStreet Ratings team rates EINSTEIN NOAH RESTAURANT GRP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate EINSTEIN NOAH RESTAURANT GRP (BAGL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BAGL's revenue growth has slightly outpaced the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $14.29 million or 3.74% when compared to the same quarter last year. In addition, EINSTEIN NOAH RESTAURANT GRP has also modestly surpassed the industry average cash flow growth rate of -4.56%.
- EINSTEIN NOAH RESTAURANT GRP's earnings per share declined by 26.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EINSTEIN NOAH RESTAURANT GRP increased its bottom line by earning $0.82 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.82).
- The share price of EINSTEIN NOAH RESTAURANT GRP has not done very well: it is down 22.72% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: BAGL Ratings Report