NEW YORK (TheStreet) -- Bloomin' Brands (BLMN) shares are down 1.4% to $21.05 in early market trading on Tuesday after the Outback Steakhouse restaurant parent company announced that Bain Capital would be selling 18.3 million shares of the company in a public offering.
Bain Capital along with Catterton Partners purchased Bloomin' Brands for $3.2 billion in 2006 before taking it public at $11 per share six years later in 2012.
Bain Capital owned 36.6 million shares for a 29.2% stake in the company as of June 30, according to a Wall Street Journal analysis.
Goldman Sachs will act as the underwriter for the public offering to which all proceeds will go to the selling stockholders with none being sold by the company itself.
TheStreet Ratings team rates BLOOMIN' BRANDS INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BLOOMIN' BRANDS INC (BLMN) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, poor profit margins, disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 201.3% when compared to the same quarter one year ago, falling from $11.29 million to -$11.44 million.
- The debt-to-equity ratio is very high at 2.48 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 currently extremely low, coming in at 14.28%. Regardless of BLMN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BLMN's net profit margin of -1.07% significantly underperformed when compared to the industry average.
- 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 on the basis of return on equity, BLOOMIN' BRANDS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The share price of BLOOMIN' BRANDS INC has not done very well: it is down 13.80% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: BLMN Ratings Report