Strong And Under The Radar: Popeyes Louisiana Kitchen (PLKI)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Popeyes Louisiana Kitchen ( PLKI) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Popeyes Louisiana Kitchen as such a stock due to the following factors:

  • PLKI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.7 million.
  • PLKI is making at least a new 3-day high.
  • PLKI has a PE ratio of 31.3.
  • PLKI is mentioned 0.61 times per day on StockTwits.
  • PLKI has not yet been mentioned on StockTwits today.
  • PLKI is currently in the upper 20% of its 1-year range.
  • PLKI is in the upper 35% of its 20-day range.
  • PLKI is in the upper 45% of its 5-day range.
  • PLKI is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on PLKI:

Popeyes Louisiana Kitchen, Inc. develops, operates, and franchises quick-service restaurants. The company operates in two business segments, Franchise Operations and Company-Operated Restaurants. PLKI has a PE ratio of 31.3. Currently there are 4 analysts that rate Popeyes Louisiana Kitchen a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Popeyes Louisiana Kitchen has been 177,800 shares per day over the past 30 days. Popeyes Louisiana Kitchen has a market cap of $1.1 billion and is part of the services sector and leisure industry. The stock has a beta of -0.34 and a short float of 3.9% with 4.94 days to cover. Shares are up 21.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Quant Ratings rates Popeyes Louisiana Kitchen as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 12.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • POPEYES LOUISIANA KITCHEN reported flat earnings per share in the most recent quarter. 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, POPEYES LOUISIANA KITCHEN increased its bottom line by earning $1.41 versus $1.25 in the prior year. This year, the market expects an improvement in earnings ($1.62 versus $1.41).
  • The gross profit margin for POPEYES LOUISIANA KITCHEN is rather high; currently it is at 66.29%. Regardless of PLKI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PLKI's net profit margin of 15.45% compares favorably to the industry average.
  • In its most recent trading session, PLKI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, POPEYES LOUISIANA KITCHEN's return on equity significantly exceeds that of both the industry average and the S&P 500.


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