The Restaurant Industry Looks Cheap: 3 Stock Ideas - most popular italian dishes in restaurants

With stocks hitting new highs week after week, it's hard to find listed companies that can be considered bargains.
However, one area not shared in this excitement is restaurants.
In the ongoing "restaurant recession", the share of most of the full-service and fast-casual concepts is significantly lower than the highs of a few years ago.
According to Warren Buffett's motto of "greed when others are afraid", callback may be a good opportunity to give players with the best prospects more benefits.
Here, I review the reasons for the decline and suggest three companies that deserve further research.
Analysts have raised a number of reasons for the current restaurant slump, many of which are common in the cyclical, competitive industry that relies on expanding the number of units.
Industry watchers and restaurant managers generally believe that the biggest problem facing the industry is just that there are too many places to eat.
Like airlines and cinemas in the 1990 s, many operators have to disappear before supply meets demand.
Consumer preference for a 'foodie, 'culture is becoming more and more popular, especially among young and affluent urbanites with a lot of disposable income, which does not help the ubiquitous chain stores.
A recent study found that independent restaurants and small chain stores outsold large, full-service and fast-moving companies.
In the battle for market share at grocery stores, Americans are enjoying the longest period of food price deflation in years.
However, the growing gap between cooking costs and eating out costs hurts restaurants.
Tight labor market also means higher wage spending for restaurants, which contributes more to the cost gap.
Although physical retail has not yet been discussed, preliminary evidence suggests a continued contraction of bricksand-
Mortar retail is the reason for the decline
The restaurant is crowded.
Restaurants are naturally concentrated in the main shopping areas, many of which have been destroyed in economically depressed areas.
Extreme pessimism about a fundamentally sound business is often a reverse indicator.
Nearly three years ago, Time published an article entitled "Starbucks and fast food leisure beat McDonald's and fast food", which was echoed by many others in the commercial media.
At that time, the stock of fast food restaurants was in trouble, while the income of fast leisure companies was shrinking.
However, since that article was published, McDonald's (MCD)
Starbucks shares rose 80%, followed by 29%.
At the end of the day, cyclical, valuation, and expectations have a greater impact on future returns than the usual illusory narrative.
Starbucks was not a good buy and sell in 2015, but at the end of 2000, it was an extraordinary opportunity when growth stagnated and the economy was in recession.
Starbucks later started an epic shift, with its share price up 40 times.
Today, the full service and the concept of quick leisure take turns in the kennel.
To be sure, not every operator will have a happy ending, but these three chains are worth seeing.
The biscuit barrel is a major example of "business within the enterprise.
"Not only does it run a successful restaurant chain, but 20% of its revenue comes from the Internet.
Retail stores on site.
The founder's vision is to find restaurants near the main highway, offering families a better choice than the ubiquitous fast food chain.
This strategy has proven to be a huge success, and today the company operates more than 600 stores, mainly in the South and Central West.
The biscuit barrel is almost unique among its peers as it has restaurants and most of the real estate.
This vast asset base provides Cracker Barrel with great flexibility in adjusting his business or returning capital to shareholders in the future.
Despite the slowdown in unit growth, it still generated 23% from the previous month (and growing)
Return on investment capital and return on dividends are 3%.
Outspoken businessman Sardar Biglari holds 19.
7% of companies use Biglari Holdings, his investment vehicle (BH)
Tried to control the biscuit barrel for years, but did not succeed.
Like other activists in the restaurant space, Biglari believes the company should suspend its expansion plan and return more capital to shareholders.
In either case, Cracker Barrel has a lot of options and the stock still looks less expensive with 19 times the yield.
With its gorgeous aesthetics and huge calories
The Cheesecake Factory menu is full of cheesecake, in contrast to the minimalism of the latest generation of restaurants.
Usually I prefer to be simple and not complicated, but the Cheesecake Factory is probably the best of its kind.
On average, this restaurant chain has the most passenger traffic in the full-service restaurant.
A 2012 article in The New Yorker describes how the company converts food preparation into science, almost squeezing out efficiency per ounce.
Despite a slowdown in sales growth and pressure on profits, the $2 billion company generated more than $100 million in free cash with $100 million in long-term debt --
Good for more than 20% return on investment capital.
The Cheesecake Factory has more than 200 locations and plans to expand to 300 locations, and the strict site selection method has kept the company very profitable.
More than 25 years after the company went public, founder David Overton still led the company as CEO.
Unlike other chain restaurants, Overton's Cheesecake Factory has avoided food style, although it has recently tried to get rid of its intuition --
Destroy the image by introducing more nutritious choices.
Cheese Cake Factory is cheap and brand different
Success in the market.
The financial and operational capabilities of management also provide a lot of breathing room for the company in a difficult environment.
The stock is less than 17 times earnings and should not be dismissed.
At the owner/distributor of nearly 1,700 Chili and Maggiano restaurants, sales and profits are under pressure.
Operating profit margin fell to 7.
8% 10 high from 2015.
4%, net income fell from a peak of $0. 2 billion in the past 12 months to $0. 137 billion.
The $0. 25 billion bond payments due in 2018 also cast a shadow on the business.
Despite these problems, the stock looks attractive at 12.
7 times the income, a 4. Yield of 3%.
Like the other two chain stores I 've discussed, most of Brinker's restaurants are run by companies rather than franchisees.
Brinker has more than 60% restaurants and the company owns about 12% of its store real estate.
In 2016, the company bought 103 pepper companies owned by a troubled franchisee for $0. 106 billion.
Does this unusual move mean that Brinker is dressing himself up for sale?
Analysts have been speculating over the years about the acquisition of the company, which is not impossible given its large asset base and low valuation.
However, the change in Brinker is still fruitless.
The company recently announced that it plans to reduce "menu crawling" by discarding poorly performing projects and focusing on improving popular dishes such as ribs and fajitas ".
Brinker also wants more digital ordering and roadside pickup.
Disclosure: I/we have no positions in any of the stocks mentioned and no plans to start any positions in the next 72 hours.
This article was written by myself and expressed my views.
I received no compensation (
In addition to Seeking Alpha).
I have no business relationship with any stock company mentioned in this article.