Valuation Multiples of Key Restaurant Players



Market update

Over the past one month, US markets have experienced high volatility. The Volatility Index, which is also referred to as the “fear gauge,” increased almost 69%. Usually, when the Volatility Index increases, the market experiences selling pressures.

Now let’s look at how restaurant stocks such as Starbucks (SBUX), Chipotle (CMG), Panera (PNRA), and Yum! Brands (YUM) have performed. The Consumer Discretionary Select Sector SPDR ETF (XLY) remained flat over the past one month.

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Year-to-date, most of these stocks are still beating the benchmark index S&P 500, which has a return of -6% as of the date of this writing. The fall was a result of global growth concerns, especially from China.

To add to this, the Federal Reserve once again held off on increasing the federal funds rate, reinforcing the concern over global slowdown. The view that these global developments could impact the US economy had a negative impact on the market.

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What we’ll cover in this series

In this series, we’ll look at where some major restaurant companies such as Starbucks, Chipotle, Panera, and Yum! Brands are trading from a valuation standpoint. We’ll look at various multiples such as PE (price to earnings) as well as EV (enterprise value) to the next 12 months EBITDA (earnings before interest, tax, depreciation, and amortization).


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