|Shares Out. (in M):||7||P/E||0||5.5|
|Market Cap (in $M):||35||P/FCF||0||0|
|Net Debt (in $M):||-2||EBIT||0||0|
DAVE is a casual dining, BBQ-themed restaurant concept.
I am posting this idea as an interesting turnaround situation. Given short interest, there should also be strong short-term positive trading dynamics as well. Potential for significant upside should franchisee comps improve further/turn positive versus very little downside given valuation.
DAVE reported it's 3Q earnings a couple days ago and held a brief conference call. I think the 3Q report marks a significant turning point. Here were several significant items:
Once the dusts settles on DAVE, you should have a company with a franchisee royalty stream of roughly $14.5M, and G&A at $8.0M. Company store operating margins are positive and improving, up 70bips YoY for the nine months to 6.1% vs. 5.4% and for 3Q they improved 320 bips from 3.8% to 7.0%. I am assuming that the income from these uniits roughly offsets the D&A. This leaves us with about $0.85c pretax. (net interest expense should be negligible as company sold some shares post the close of the quarter and also received approxiimatley $1.5M net as the purchase price for the co-owned stores which were franchised out). (Note: DAVE also owns some of the remaining real estate for some of its remaining co-owned stores, so there is potentially some additional asset sales in addition to converting these to franchised units).
further deterioration in casual dining sector
unquantified need to invest in the brand