What is new with CBOU
MK - long time listener first time caller. What is new in your mind besides the stock falling for CBOU. For many years I have enjoyed their coffee and we talked about this stock early in its trading days. I remember you got excited when in MPLS and seeing those shops were packed, although outside of MPLS I don't think this is the case. I believe you sold your initial position??? Anyway I would be interested in hearing some details on how you are thinking about valuation from here
posted by blog_name at
1:51 PM
5 Comments:
Well, it is a tough story to get your hands around. Competition with Starbucks is not easy, but there needs to be a solid number two in this area.
Having no friends in the suburbs of chicago, has left me a lot of time to sit in my local CBOU and read while watching the regulars there. These people are in there every day, and they all have the customer cards that they keep on their key chains that they refill. And if you are a regular at a coffee shop, you know the people you are unlikely to switch. It is part of your routine. You go there 5 times a month. The more people you retain like this the better your franchise. These are teh type of stores they are looking for. Free WiFi, comfortable seating, and nice ambiance lovers.
I think it is just purely undervalued growth stories. They have spent a lot making their stores more of a destination with the square tables and elaborate decoration, and they have to depreciate that for the life of the lease and not the life of the store. This if left as a public company would be very earnings positive if put into runoff. That will probably never happen. But it is nice to dream.
The sponsor that owns it I think is totally deadbeat and could sell the company for a solid multiple. They have their money out.
I think that EBITDA is artificially low due to the closing costs and opening costs of new stores and if I were to buy the whole company it would become extremely profitably by going strictly to the franchise model.
If I were to buy the whole company I would also sell the company owned stores.
It trades close to book and the book is being depreciated agressively.
Those are my thoughts obviously off the top of my head.
Did Jerry write that?
Jerry why do you like duck
Because its delicious!
10 times EBITDA seems reasonable for PNRA, right. Maybe I should not wait for a lower price.
Bread and coffee.
Post a Comment
Subscribe to Post Comments [Atom]
<< Home