The WSJ article mentioned that FM and Vons are going to court "next month", although we've been hearing this for some time now. Also, Vons' countersuit against Foodmaker accuses FM of making "allegedly harmful statements". I'm no lawyer, but I can hardly imagine that the two arguments are a wash. Unless the two sides settle, this will be a jury trial and people will ultimately use their common sense to determine liability. People DIED as a result of Vons selling FM tainted meat. Foodmaker will have no problem documenting the losses due to legal settlements with victims and the losses in sales and revenues to the company. Would Vons be able to offer the same proof of damage due to "harmful statements?" Hardly anyone in the general public knows that Vons was really the culprit in this tragic incident. Jack-in-the-Box took all the negative press because they were the end-seller to the public. Again, I do not pretend to know all the legal facts, but I think FM has a good chance of either a substantial settlement or a victory in court.
As to fundamentals, FM is in a strong growth pattern compared to others in the quick-service industry, with expansion plans being carried out successfully. Foodmaker is now officially the 5th largest burger chain. With the recent annoucement that they are retiring a nice chunk of their long-term debt, this will add to their chances to make $1.00/share/year minimum as we move forward. At a stock price of $18, that's a PE of around 18, low compared to many other stocks on the big board. You can review my analysis post at: techstocks.com where I run the numbers more thoroughly.
As I write, FM is in the middle of it's first significant pullback in quite a while. I'm using it as a buying opportunity.
Good luck, and as always, do your own research,
D. Kuspa |
