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Bloomin’ Brands (BLMN - Free Report) is a Zacks Rank #5 (Strong Sell) that is a casual dining restaurant company with a portfolio of differentiated restaurant concepts.
The company has been underperforming as it struggles to meet market expectations and faces several strategic and operational challenges. Despite some positive signals in recent performance, the outlook remains clouded with uncertainties.
About the Company
Bloomin’ Brands was founded in 1988, employs 87,000, and is headquartered in Tampa, Florida.
Its restaurant portfolio has four concepts, including Outback Steakhouse, a casual steakhouse restaurant; Carrabba's Italian Grill, a casual Italian restaurant; Bonefish Grill; and Fleming's Prime Steakhouse & Wine Bar, a contemporary steakhouse.
BLMN is valued at almost $2 billion and has a Forward PE of 9. The stock holds Zacks Style Scores of “A” in Growth and Value and pays a 4.5% dividend.
Q1 Earnings
In its most recent earnings report, BLMN missed earnings by 7%. Revenue came in at $1.20 billion, matching estimates, but this alone isn't enough to instill confidence in investors. The company’s guidance for Q2 is particularly concerning, with an expected EPS range of $0.55 to $0.60, significantly below the consensus estimate of $0.69. Comparable restaurant sales are projected to be flat to up just 1.5% year-over-year, indicating minimal growth in the near term.
Margins and sales struggled, with the company’s restaurant-level operating margin declining to 16.0% from 17.9% last year. U.S. combined same-store sales (SSS) were down 1.6% year-over-year, further highlighting the struggles in maintaining growth.
While BLMN’s marketing and operations initiatives have shown some success, particularly at Outback Steakhouse, these gains are not substantial enough to counteract the broader issues faced by the company.
Adding to the uncertainty is BLMN's announcement that it is exploring strategic alternatives for its Brazil operations. This move, while potentially beneficial in the long run, introduces short-term uncertainty and potential disruption.
Earnings Estimates Trending Lower
Over the last 30 days, earnings estimates for the current quarter have fallen from $0.69 to $0.59, or 14%.
For the current year, estimates have dropped from $2.55 to $2.44, or 4% over the last 30 days. And for next year, estimates have fallen 3% over that same time frame.
Analysts have reflected mixed sentiments about BLMN’s future. JPMorgan Chase and Co. have reiterated a Neutral rating, with a reduced-price target of $24 from $26. UBS also maintains a Neutral rating but has cut the price target more drastically from $30 to $26. These ratings suggest a cautious stance on BLMN’s ability to navigate its current challenges and achieve growth targets.
Technical Take
BLMN is trading at 2024 lows and is threatening to take out the 2023 lows set lats January. Below there, some investors might be beyond their pain threshold and start to sell. The 2022 July lows would then be in plat around the $16 level.
Those interested in the stock should be patient. The 50-day moving average gas just crossed the 200-day MA siganling a death cross. This is typically a bearish symbol and a sign to stay away until technical conditions improve.
In Summary
While Bloomin' Brands has demonstrated some resilience in a challenging market, the numerous headwinds it faces cannot be overlooked. The earnings miss, disappointing guidance, declining margins, and strategic uncertainties in Brazil collectively paint a bearish picture for the stock.
Investors should approach BLMN with caution, as the company needs to prove its ability to overcome these hurdles and deliver sustained growth.
For those interested in the space, a better option might be Wingstop (WING - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) that is coming off a 29% EPS beat.
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Bear of the Day: Bloomin Brands (BLMN)
Bloomin’ Brands (BLMN - Free Report) is a Zacks Rank #5 (Strong Sell) that is a casual dining restaurant company with a portfolio of differentiated restaurant concepts.
The company has been underperforming as it struggles to meet market expectations and faces several strategic and operational challenges. Despite some positive signals in recent performance, the outlook remains clouded with uncertainties.
About the Company
Bloomin’ Brands was founded in 1988, employs 87,000, and is headquartered in Tampa, Florida.
Its restaurant portfolio has four concepts, including Outback Steakhouse, a casual steakhouse restaurant; Carrabba's Italian Grill, a casual Italian restaurant; Bonefish Grill; and Fleming's Prime Steakhouse & Wine Bar, a contemporary steakhouse.
BLMN is valued at almost $2 billion and has a Forward PE of 9. The stock holds Zacks Style Scores of “A” in Growth and Value and pays a 4.5% dividend.
Q1 Earnings
In its most recent earnings report, BLMN missed earnings by 7%. Revenue came in at $1.20 billion, matching estimates, but this alone isn't enough to instill confidence in investors. The company’s guidance for Q2 is particularly concerning, with an expected EPS range of $0.55 to $0.60, significantly below the consensus estimate of $0.69. Comparable restaurant sales are projected to be flat to up just 1.5% year-over-year, indicating minimal growth in the near term.
Margins and sales struggled, with the company’s restaurant-level operating margin declining to 16.0% from 17.9% last year. U.S. combined same-store sales (SSS) were down 1.6% year-over-year, further highlighting the struggles in maintaining growth.
While BLMN’s marketing and operations initiatives have shown some success, particularly at Outback Steakhouse, these gains are not substantial enough to counteract the broader issues faced by the company.
Adding to the uncertainty is BLMN's announcement that it is exploring strategic alternatives for its Brazil operations. This move, while potentially beneficial in the long run, introduces short-term uncertainty and potential disruption.
Earnings Estimates Trending Lower
Over the last 30 days, earnings estimates for the current quarter have fallen from $0.69 to $0.59, or 14%.
For the current year, estimates have dropped from $2.55 to $2.44, or 4% over the last 30 days. And for next year, estimates have fallen 3% over that same time frame.
Analysts have reflected mixed sentiments about BLMN’s future. JPMorgan Chase and Co. have reiterated a Neutral rating, with a reduced-price target of $24 from $26. UBS also maintains a Neutral rating but has cut the price target more drastically from $30 to $26. These ratings suggest a cautious stance on BLMN’s ability to navigate its current challenges and achieve growth targets.
Technical Take
BLMN is trading at 2024 lows and is threatening to take out the 2023 lows set lats January. Below there, some investors might be beyond their pain threshold and start to sell. The 2022 July lows would then be in plat around the $16 level.
Those interested in the stock should be patient. The 50-day moving average gas just crossed the 200-day MA siganling a death cross. This is typically a bearish symbol and a sign to stay away until technical conditions improve.
In Summary
While Bloomin' Brands has demonstrated some resilience in a challenging market, the numerous headwinds it faces cannot be overlooked. The earnings miss, disappointing guidance, declining margins, and strategic uncertainties in Brazil collectively paint a bearish picture for the stock.
Investors should approach BLMN with caution, as the company needs to prove its ability to overcome these hurdles and deliver sustained growth.
For those interested in the space, a better option might be Wingstop (WING - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) that is coming off a 29% EPS beat.