I'm a bit puzzled by the sp, the last results update reported a large loss. However stripping out the writedown of previous investment (restaurant opening costs), then the underlying business is still decently profitable. The questions I have is will that underlying profitability will come under more pressure and is it just particular restaurants under pressure (due to their location) or more generally due to cost pressure.
In one way the investment writedown itself isn't a concern as that cash has long ago been spent, it's just a case of whether the cost is recognised in a lump now (writedown) or over time (depreciation).
At the current price, I'd say the company is undervalued, the risk though is more bad news.
This board has gone dead since April. Not sure I understand what's going on with this company as the results balance sheet appears to show it as loss making. Obviously there is considerable pressure on the restaurant sector currently. Any thoughts appreciated.
I'm completely sat on the fence. Part of me thinks the sell-off is overdone, as aside from the write-off they are still decently profitable and still planning to open further restaurants this year.
I think it would be have helpful if they had given more information around the under-performing restaurants (how many there are/the cause of the under-performance). It would help to understand if it's a local issue to those particular restaurants, or a wider business-wide issue. The inference being, as they haven't said, it's business wide?
But from that perspective, I can't imagine cost pressures are that great? I know GBP/EUR has a slight adverse movement, but I can't imagine they get much in USD which is where the greater adverse movement is. Business rates will have some effect, but that cost hasn't hit yet.
Separately Brexit doesn't seem, so far at least, to have had a significant impact on consumer spending.
My fear is there is more bad news to come, but I like others, have some faith in the Kay's. I'll probably give it to the half-year results.
I originally bought into Tasty because of the Kayes and their track record.If it was any other management I would be jumping ship now even with the large loss I am sitting on.However I still have confidence they can turn this around and will be sticking around
Awful results indeed. I must admit I'm not as sanguine as you seem to be about not opening as many sites as they had planned. This is a chain of restaurants and less of that chain means we are going to wait longer for profits and recovery.
The front page of MotleyFool site this morning doesn't suggest there is going to be any quick recovery either. This is the last paragraph.
"...With headwinds against the business building and Tasty struggling to hit City forecasts for growth, it looks as if this is one falling knife investors should avoid. The shares may have further to fall before they fully reflect the companys new depressed outlook and it will take some time for the company to prove to the rest of the market that can return to its previous growth trajectory"
Results profit warning pretty awful.Only light on the horizon at the moment is that it was heavily oversubscribed at 145 and although the company is cutting back on opening new sites they have not stopped completely and are aimimg to open another five.This shows some confidence in going forward.
I've been watching these shares for a while with a view to buying but they keep sinking. I was wondering if it was to do with concern over property rate costs going up, especially in the richer city locations i.e. London?
2016 valuation looks high with a PER of 21.6.
2017 looks good with a PER of 14.8, good EPS Growth of 45.9% giving a great PEG of 0.32.
Shares are down about 19% from their peak.
If they were to drop a little more I think I would buy a few more. I dont think they will drop enough to bring the PER down to 16 which is normally like to buy at or below. For a good company with management that has a proven record so I'd be ok and paying for a slightly higher valuation than I'd normally like.
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