AFC Posts Prelim Results, Lowers View - Analyst Blog


Atlanta, GA-based quick-service restaurant chain AFC Enterprises Inc. ( AFCE ) recently declared its preliminary fourth-quarter and full-year 2013 results.

Quarter Highlights

In the fourth quarter, AFC Enterprises' global comps surged 0.8%, led by a 0.3% upside in domestic same-store sales and 4.2% rise in the International Franchised same-store sales. However, the quarterly comps were much lower than the year-ago quarter's comps growth of 6.2%. The company-owned restaurants' comps were down 1.2% compared with an increase 7.8% in the year-earlier quarter.

The company's global comparable store sales grew by 3.7% in 2013, down from the year-ago period's comps of 6.8%.

The domestic same-store sales have declined 3.6%, down from 7.5% in 2012 whereas International Franchised same-store sales were 4.7%, higher from 2.6% in 2012.

Store Update

The company's store opening momentum remained unruffled amid a volatile macroeconomic situation. AFC Enterprises, which operates and franchises Popeye's restaurants, unveiled respective 49 and 22 restaurants domestically and internationally during fourth-quarter 2013.

In 2013, the company launched 194  restaurants globally. This is the highest number of restaurant opening for the company since 1999. The number of restaurant openings in 2013 was within management's guidance range of 185-195. Additionally, AFC Enterprises shut down 68 units in 2013.

In addition, AFC Enterprises' projected net unit growth of 126 restaurants in 2013 was above the company's guidance range of 100-120 net restaurants.

At the end of the fourth quarter, the company had 2,225 units out of which 45 were domestic company-owned outlets, 1,769 franchised domestic units and 456 franchised international units.

Full-Year 2013 Guidance

The company has increased its adjusted earnings guidance for 2013. The earnings in 2013 are likely to be driven by the company's high revenue growth in fourth-quarter 2013. Moreover, the company's expansion initiatives are expected to aid earnings further.

The company projects its adjusted earnings per share for the full year of 2013 to be within $1.42-$1.43 up from the range of $1.39 to $1.42. 2013 earnings are expected to increase 15% year over year.

The Zacks Consensus Estimate for 2013 is $1.42 which is at the higher end of the company's guidance range.

The company has projected that in 2013, general and administrative costs will be $73.5 million (3% of system-wide sales) which is within the company's prior guidance range of $74 million-$75 million.

Management announced that it has achieved significant growth in 2013, which will help it attain noteworthy improvement in its Popeye's business, going forward.

AFC Enterprises currently has aZacks Rank #3 (Hold). Investors interested in the restaurant industry may consider stocks like Fiesta Restaurant Group, Inc. ( FRGI ), The Cheesecake Factory Inc. ( CAKE ) and Cracker Barrel Old Country Store, Inc. ( CBRL ). While Fiesta Restaurant sports a Zacks Rank #1 (Strong Buy), The Cheesecake Factory and Cracker Barrel have a Zacks Rank #2 (Buy).

AFC ENTERPRISES (AFCE): Free Stock Analysis Report

CHEESECAKE FACT (CAKE): Free Stock Analysis Report

CRACKER BARREL (CBRL): Free Stock Analysis Report

FIESTA RESTRNT (FRGI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AFCE , CAKE , CBRL , FRGI

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