AFC Enterprises Inc.
) posted adjusted earnings of 34 cents per share in the fourth
quarter of 2012, outpacing the Zacks Consensus Estimate of 31
cents and the year-ago quarter level of 24 cents per share. In
full year 2012, earnings per share were $1.24 versus 99 cents in
The year-over-year improvement was driven by the company's
strong top line and comparable sales growth. Moreover, the
company has five strategic plans in place. These include
development of the Popeye's brand, more value-added services
through its restaurant concepts, strengthening of restaurant
profit margin with cost-saving initiatives, higher new unit
growth and improving its work culture.
Behind the Headline Numbers
The operator and franchisor of Popeye's restaurants reported
total revenues of $47.5 million in the fourth quarter, up 30.9%
from the year-ago quarter on positive global same-store sales and
unit growth. The revenues in the quarter surpassed the Zacks
Consensus Estimate of $45 million. In full year 2012, total
revenues went up 16% year over year to $178.8 million on positive
same-store sales of 6.9%.
AFC Enterprises' total revenues primarily comprise
company-operated restaurant sales (up 32.3% year over year at
$16.4 million), franchise revenues (up 31.4% at $30.1 million)
and rent and other revenues (flat at $1.0 million).
In the fourth quarter, the company's global same-store sales
spiked 6.2%, resulting from a 6.4% upside in domestic same-store
sales and a 4.3% jump in international franchisee same-store
In the quarter, operating profit was $14.6 million, up 55.3%
year over year.
The Popeye's system opened 62 restaurants in the fourth
quarter of 2012; 42 of which were domestic and 20 international.
At the end of the fiscal year, the company had 2,104 restaurants,
among which 1,679 were company-owned and 425 international units.
In full fiscal 2012, the company opened 141 units and shut down
During the fourth quarter, the company bought back 144,000
shares worth $3.7 million. In 2012, the company repurchased
nearly 741,000 at the cost of $15.2 million. Moreover, management
has also recently authorized an extra $50 million for the
existing share repurchase program.
AFC Enterprises ended the quarter with cash and cash
equivalents of $17 million versus $24.8 million in the previous
quarter. Shareholders' equity in the quarter was $34.2 million
compared with $26.9 million in the third quarter of 2012.
The company expects same-store sales to grow in the range of
3% to 4% in 2013. Adjusted earnings per share are anticipated to
be $1.37 to $1.42.
The quick-service chicken restaurant chain expects to open 175
to 195 restaurants and net restaurant openings will likely range
from 85-115 in 2013. For 2013, AFC Enterprises sets a target of
nearly $15 million to $20 million for share buyback.
In the long-term, the company expects comps to be positive
ranging from 1% to 3% and net unit will grow within the range of
4% and 6%, whereas earnings per share will improve 13% to
The company with its solid product pipeline, improving top
line, better operational strategy and unit growth is well
positioned to perform better in the future. However, higher
commodity inflation could weigh on the company's results, going
AFC currently retains a Zacks Rank #4 (Sell). Another
Red Robin Gourmet Burgers Inc.
) adjusted earnings in the fourth quarter of 2012 were way ahead
of the Zacks Consensus Estimate as well as the year-ago quarter's
earnings. Red Robin Gourmet currently carries a Zacks Rank #1
Other restaurant companies like
Krispy Kreme Doughnuts, Inc.
Burger King Worldwide, Inc
) both with a Zacks Rank #2 (Buy) are expected to perform well,
AFC ENTERPRISES (AFCE): Free Stock Analysis
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