Is Bloomin Brands a Solid Long Term Investment?

Outback Steakhouse

Value investing has, over the years, become a popular stock market trend. The trend has also proven to be successful regardless of any market environment. Bloomin Brands has been on a lot of investors’ radar for quite some time now and is understandably one of the best stocks to buy currently. However, if you still are not sure if purchasing the Bloomin Brands stock is a good investment or not, this article will highlight the pros and cons of the capital thus helping you make an informed decision.

What is Bloomin Brands?

Bloomin Brands was founded in 1988 in Florida by Bob Basham, Tim Gannon, and Chris Sullivan. That year the trio opened the first Outback Steakhouse in Florida. Over the years, the company grew, and in 1991, Bloomin Brands went public as a 49 restaurant chain. It’s expansion into international territory’s began with the first Outback Steakhouse in Canada in 1993. For the first time, Bloomin Brands’ annual revenue surpassed the $1 billion mark. According to Wikipedia, the three founders of the company, also referred to as Kangaroo Inc. decided to acquire OSI Restaurant in November 2006 for $3 billion. David Deno replaced Elizabeth smith as CEO in April 2019.

Bloomin Brands Contribution to Charity

When America got hit by the terrorist attacks in 2001, Bloomin Brands and other restaurants in the country partnered up to raise more than $1 million for the 9/11 victims in an initiative called The Dine out for America.

The Company’s Contribution to Politics

The company has a political action committee which gives to democrat, republican, liberal and conservative candidates alike. The committee provides to members on the various congressional committees which oversee its business sectors. The Bloomin Brands Inc. Political Action Committee raised over $334,000 in a 2018 financial filling and spent $301,000. During the 2017-2018 period, the committee contributed to various committees and specific business sectors.

Reasons Why You Should Buy Bloomin Brands Stock

According to the Motley Fool, the company reported a good set of earnings on its fourth quarter of the 2019 fiscal year. The total revenue for that fiscal year rose marginally, and in a show of faith, the company adjusted its earnings for every share up to 2.7 % per year. This adjustment saw the company adjusting its annual dividend up from $0.40 to $0.80 in a yearly dividend. This amount makes the Bloomin Brands’ stock one of the most favorable and desirable stocks to own currently.

Bloomin Brands P/E Ratio

Based on the previous year’s earnings of the company, Bloomin Brands has a P/E ratio index of 16:9. In layman terms, if you purchase a Bloomin Brands stock, you pay $16.19 for every dollar. This P/E ratio is relatively lower than the average ration in the industry, which is 26:6. The P/E ratio is a display of the public’s expectations of a company. Bloomin Brands’ lower P/E ratio suggests that participants in the hospitality industry anticipate that Bloomin Brands is likely to underperform in its sector. The lower P/E Ratio of the company puts it at an advantage as a lower ratio is attractive to potential buyers. A company can reduce its P/E ratio by either spending the cash it has or taking in debt to achieve higher earnings. Additionally, Bloomin Brands current P/S ratio is 0.4, and the company’s dividend yield is at 4.4%. These, among other factors, including the impressive P/E ratio paly a significant role in placing Bloomin Brands among the best value picks among investors.

The P/S ratio means that shareholders pay a moderately low level for every dollar that the company earns. This ultimately means that Bloomin Brands has a good revenue metric to back up their earnings. According to Simply Wall Street, Bloomin Brands’ debt is capped at 63%. To place the stock in full comparison with others in its category, you might need to bear in mind that Bloomin Brands has substantial borrowings. It is critical to note that the company had announced that they were planning to find ways to increase the overall value of shareholders which if possible could include a sale of the company as reported by the company’s CEO David Deno.

Reasons Against Buying fhe Stock

As of November 2019, Bloomin Brands had been holding a share price of $20. However, the COVID 19 pandemic has proven to be a setback for the restaurant chain. Ever since the epidemic struck, the stock market has witnessed a spell of selling in stocks in the hotel industry. By the time the US had reported 59 confirmed cases in February, the company’s stock had plunged 23% in under a week. This was after the company had provided its shareholders with a positive outlook of the company just a few days prior. It is difficult to estimate the level of damage the COVID 19 pandemic has caused regarding the stock market. Investors and companies such as Bloomin Brands can only hope that the situation gets resolved quickly to recoup some of the losses they’ve encountered ever since the Coronavirus hit.

Final Thoughts

The COVID 19 situation sees no near end in sight and companies in the hospitality sectors such as Bloomin Brands are set to experience further losses. If you are the risk-averse type, then this stock is not a better match for you due to the fluctuations owed to the virus. However, if you like taking risks and are into the whole value investing idea, then Bloomin Brands might serve you well in the future. It is of the essence to note, however, that the losses that have hit the company’s stock are due to the Coronavirus and they are just a temporary setback. From the company’s growth pattern, it is safe to assume that Bloomin Brands is a substantial investment for your money.

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