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Bloomin’ Brands Stock Rises after Deutsche Bank’s ‘Buy’ Rating

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Jun. 28 2019, Updated 5:03 p.m. ET

Stock performance

Deutsche Bank’s “buy” rating for Bloomin’ Brands (BLMN) appears to have increased investors’ confidence as Bloomin’ was trading in positive territory. Today, at 2:30 PM ET, Bloomin’ was trading at $18.93, which implies a rise of 0.6% from its previous day’s closing price.

Year-to-date, Bloomin’ has returned 5.2% as of June 27, underperforming the broader equity market. The S&P 500 Index has returned 16.7% while the Consumer Discretionary Select Sector SPDR Fund (XLY) has returned 20%. XLY has invested 7.8% of its portfolio in restaurant and travel companies.

During the same period, BLMN’s peers Darden Restaurants (DRI), Texas Roadhouse (TXRH), and Brinker International (EAT) have returned 21.7%, -8.8%, and -11.2%, respectively.

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Valuation multiple

Despite the increase of 5.2% in BLMN’s stock price since the beginning of this year, its forward PE multiple has fallen from 11.8x at the beginning of this year to 11.5x as of June 27.

BLMN reported its first-quarter earnings on April 26. During the quarter, the company reported adjusted EPS of $0.75 on revenues of $1.13 billion, beating analysts’ EPS expectations of $0.73 and revenue estimates of $1.12 billion. The impressive first-quarter performance appears to have encouraged analysts to raise their EPS estimates for the next four quarters, lowering the company’s valuation multiple.

On the same day, BLMN’s peers, Darden, Texas Roadhouse, and Brinker were trading at a forward PE multiple of 18.9x, 22.7x, and 9.7x, respectively.

Also, on June 27, BLMN was trading at 11.9 times analysts’ 2019 EPS estimate of $1.58, and 10.9 times analysts’ 2020 EPS estimate of $1.72. Its EPS are expected to rise 5.4% in 2019 and 8.9% in 2020.

On June 25, Credit Suisse initiated coverage of Starbucks with an “outperform” rating. Learn more in Starbucks Hits a 52-Week High after Credit Suisse’s ‘Outperform.’

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