Bought some FRSH (Papa Murphy's Pizza) today @9.3x$. Busted IPO that came out a few weeks ago @11$. It's more of a Lynch kind of buy than a value stock. Earnings released yesterday were 12c/ share (the numbers have a lot of adjustments though).
Negatives: Lawsuits from franchises, discussion about using foodstamps, discussion about taxing their product like a restaurant takeout, maybe limited growth prospects.
What I like about them is their product, small size gives them growth prospects, category leader (ready made and take home pizza) and potential to evolve and expand the concept. Their business is capital light, since they franchise out most locations and they have a history of steady SS growth even through the recession ( their product is value priced after all). i think in a few quarters, their number should have more clarity after the IPO related expenses are gone. My hope is that they could grow revenues, while the expenses mostly stay put, so earnings should be a hockey stick curve to some extend. Current valuation is at about 8x EBITDA/EV (if you look at these metrics at all), so neither cheap, nor terrible expensive. |
