NEW YORK (TheStreet) -- Bloomin' Brands (BLMN) shares are up 3.18% to $23.38 in early market trading on Wednesday after the Outback Steakhouse restaurant parent company had its price target raised to $23 from $21 by analysts at Jefferies.
Yesterday the company announced a 24 cent per share quarterly dividend and $100 million share buyback program at its analyst day which led to the firm's upgraded price target. However analysts at Jefferies also maintained their "hold" rating on the company's stock.
"Management is committed to maintaining share gains and still sees productivity saves, but it's hard to justify a premium valuation given the pullback in growth and we think BLMN is fairly valued," said analysts at the firm.
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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.
- Although BLMN's debt-to-equity ratio of 2.50 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.31, which clearly demonstrates the inability to cover short-term cash needs.
- 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 5.48% 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