RBD - Restaurant Brands

[DarkHorse]

Surely Collins Foods on ASX represents far better value?

[Snoopy]

Surely Collins Foods on ASX represents far better value?

You could be right Dark Horse

Collins Food @ $A6.28 => PE of 19.4
YUM Brands @ $US85.89 => PE of 20.8
YUM China @ $US43.95 => PE of 23.7
Restaurant Brands @ $NZ11.60 => PE of 40.9

In saying that, RBD has the overseas expansion plans that CKF does not. Yet being the master franchise holder YUM Brands looks the most attractive of the four to me right now.

SNOOPY

discl: hold YUM, YUMC, RBD

[blackcap]

When deriving a 'discount rate', it is common for analysts to use something called the 'Capital Asset Pricing Model'. This uses input figures based on the general economic environment and specific factors related to the particular share you wish to analyse. One such factor is historical 'specific share price volatility' verses 'overall market volatility'. Personally I do not use this method. I prefer to assign an 'industry sector group volatility' figure regardless of any share specific historical volatility.

I tend to use a lower discount factor for any share which supplies basic human needs, like utilities and food companies. One potential flaw in my method has been highlighted by you below blackcap.



If the business model changes, it could me that my 'assigned discount value' to a particular sector is no longer appropriate. But you can say the same thing about the CAPM, where the input factor of 'historical share price volatility' is likely to be largely unrepresentative in the future too.






SNOOPY

Hi Snoopy, yes I know all about the CAPM and WACC. Studied it ad nauseum back in the 90's. And yes you highlight the big drawback or weakness of the CAPM. The very fact that is uses backward looking data to derive future valuation. But out of a bad bunch it is not the worst model out there. Now that we have excel it is so much easier to do DCF simulations and models. O the days at uni where it was all done on paper.. you certainly learnt how to use a calculator that's for sure.

[Cadalac123]

Hi Snoopy, yes I know all about the CAPM and WACC. Studied it ad nauseum back in the 90's. And yes you highlight the big drawback or weakness of the CAPM. The very fact that is uses backward looking data to derive future valuation. But out of a bad bunch it is not the worst model out there. Now that we have excel it is so much easier to do DCF simulations and models. O the days at uni where it was all done on paper.. you certainly learnt how to use a calculator that's for sure.

Thoughts on forward looking based CAPMs? e.g. using implied ERPs and bottom up betas instead of single regression?

I find these models highly subjective though regardless

[huxley]

Sorry for the dumb question, but can anyone tell me what percentage of the RBD stores restaurant brands also owns the buildings/land? Are they mostly leased?

[blackcap]

Thoughts on forward looking based CAPMs? e.g. using implied ERPs and bottom up betas instead of single regression?

I find these models highly subjective though regardless

No real thoughts, if you are going to use bottom up betas instead of regression you also have the subjective part in your model. You are damned if you do and damned if you don't. Bit of hocus pocus all round. But thats ok, thats what makes analysis and finance so fascinating and why so many people have different views on value.

[blackcap]

Seems that KFC brings out the feral in us:

https://www.nzherald.co.nz/business/...ectid=12328367

[Zaphod]

Seems that KFC brings out the feral in us:

https://www.nzherald.co.nz/business/...ectid=12328367

That's certainly what we've faced in retail. Rude, arrogant, self-entitled customers who will abuse you to yore face at the drop of a hat. It's also not confined to a particular gender, ethnicity, or age group.

[dreamcatcher]

KFC had to close early as ran-out-of-chicken and McDonalds ran out of hamburgers ............

[blackcap]

So I went to my local to take advantage of the free meal voucher I received yesterday. Interestingly enough, there were signs saying contactless payments only. But no worries, the card was accepted. Also really interesting was that the 3 staff all milling within centimetres of each other that I could see were not wearing any PPE whatsoever. Did not bother me, but you would think from a perception perspective this is not a good look?