MKM: Bloomin' Brands Positioned For Future Growth

Outback Steakhouse owner Bloomin' Brands Inc (NASDAQ: BLMN) has multiple initiatives and investments underway which will position the restaurant company well for future growth, according to MKM Partners.

The Analyst

MKM Partners analyst Brett Levy initiated coverage of Bloomin' Brands with a Buy rating and $20 price target.

The Thesis

Bloomin' Brands' top strategic priorities consists of improving sales through store remodels and relocation, enhanced menu through a focus on value, enhanced promotions, and superior in-store execution, Levy wrote in the initiation note.

At the same time the company is focusing on growing segments of the restaurant industry, including take-out growth, delivery expansion, and a new multi-branded loyalty program.

Management deserves credit for consistently bringing confidence, energy, and initiatives but annual sales have been stagnant between $3.5 billion to $4.5 billion range, the analyst wrote.

But the company looks to be ready to move forward with multiple initiatives to show the level of growth and consistency that investors will reward with multiple expansion. Until then, posting in-line results or even modest beats versus a long-term growth profile won't be enough to impress investors.

The research firm's $20 price target is based on a combination of a P/E multiple of 12 times on 2020 estimates and seven times EV/EBITDA.

The research firm also initiated coverage of rival restaurant portfolio company and Appelbee's parent Darden Restaurants, Inc. (NYSE: DRI) with a Neutral rating and $120 price target.

Price Action

Shares of Bloomin' Brands traded around $16.70 at time of publication.

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