$BOJA (Bojangles)

Haven't been to one in 6 years or so, but I liked them back then. I only had their breakfast biscuits, not their chicken and sides, but they had a good variety for biscuits. Anecdotal info, really. However, the breakfast options might be their edge over other chicken places.

Not sure how they would compete in LA with Popeye's, though. Again, maybe the breakfast? Fairly related, Zaxby's is trying to compete with Cane's in LA. We'll see what happens with that.

Stock-wise, they were over-valued for the IPO. Supposedly, each location was valued as much as a Wal-Mart or seomthing similarly extreme. Now, their market cap is half of Popeye's (PLKI). Not sure if that is a fair, under, or overvaluation of the company. P/E is currently at 23, which seems a bit high for my tastes, but could still be worth it.

I'll take a look at the financials at some point. If this thread is still going at that time, I'll post my findings.

I'm addicted to Bojangles breakfast.

I have nothing to add to the conversation in terms of buying stock, but I love their food. They're huge in the Carolinas.

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They're huge in the Carolinas.

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That's where I was when I ate there. They were everywhere, so we figured it was pretty good and decided to try it out. Was not disappointed.

I've taken a look at the financials for Bojangles. I'm disappointed, really. I want to like the stock because I like the restaurants and food (when I ate it 6 years ago). However, the financials just aren't reassuring for establishing a margin of safety in the investment.

First things first: the balance sheet. Current assets are 60% of current liabilities, which isn't a good sign from a liquidity perspective (ideally, current assets should at least equal, if not exceed, current liabilities). Next, $451.64 million of their $560.765 million in total assets are intangible - in other words, they're not physical and don't have much of a value to them in the event of liquidation. So, 80% of their assets exist as Goodwill and Brand. Next, they have $393.64 million in total debt, the equivalent of 70% of assets being funded by debt. However, since the company only has $109.125 million in tangible assets, debt is actually nearly 4x greater than said tangible assets. In the event of bankruptcy (which I am not expecting, mind you), shareholders would walk away with nothing. That is not good for the security of shareholders' capital.

Next, the income statement. Revenues and operating expenses have both increased since last year. Total revenue grew at a rate of about 13.4% from 2014 to 2015; expenses grew at a similar rate. However, operating margins (operating income divided by total revenue) actually declined from 12% to 10.6%, which I mostly attribute to a $10.7 million increase in General and Administrative expense. Notes in the 10-K indicate that $4.6 million of this amount is attributable to expenses from their public offerings, so that amount will not reappear in 2016. They also propose that their growing restaurant base will allow revenue to to grow faster than this expense in the future, so it is possible some of the G&A expense is attributable to laying down some support infrastructure in advance.

My only real issues with the income statement is at the end with income taxes and diluted earnings per share. The balance sheet indicates they have $115 million in deferred income taxes, which can be a hamper on future earnings. As for earnings per share: basic EPS, which accounts for only the currently outstanding shares, is $1.15 a share. Diluted EPS, which accounts for any and all securities that could increase the number of outstanding shares, is $0.71 a share. That's a big negative for a current shareholder in the event of this dilution.

TL;DR: balance sheet sucks with little tangible assets, too much debt in comparison, and shaky liquidity. Income statement looks alright for an expanding business in my opinion; however, deferred income taxes can put a dent in future earnings, and the exercising of existing dilutive securities would be unfortunate for current shareholders.

As is, I don't see a margin of safety in the stock currently, but I will watch it into the future because it may become a good opportunity one day. Also, please keep in mind that my analysis does not mean the stock price will rise or fall; my analysis may be (and most likely is) incomplete of all pertinent information, and markets often act irrationally. Lastly, I apologize that this is a huge wall of text that is probably formatted poorly and may be confusing at times.

Tku Omada, the analysis is much appreciated! Unfortunate the financials aren't in better shape.

They are building one in the little town where I live right now. I'm not aware of one in Lexington, which is 15 miles away. Looking forward to checking it out.

Hard for anyone to come into LA and compete with Popeyes

Bojangles (food) is better than popeyes.