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Strategies & Market Trends : Value Investing
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To: Shane M who wrote (53935)5/23/2014 8:14:49 PM
From: Charles2185  Read Replies (2) of 78530
 
Similar to PBPB, valuation is just too damn high given its slow but predictable growth rate. Unlike tech where earnings can accelerate in high double to low triple digits rates, restaurant stocks are constrained by how fast they could expend. The main limiting factors are the amount of cash that the main business generates and how many suitable sites are available at economic sensible terms. Pay attention to how PZZA got its sales growth in the past 3 years - it's by buying restaurants, not through adding franchisees. Owning restaurants are much more capital intensive and lower returns than franchising them.
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