Burgerfuel

[kizame]

Crikey i make the PE ratio at 77 with todays profit announcement. That's pricing in a lot of growth.
I am a bit more comfortable with diligent on that sort of PE.
Unless there is a threshhold where economies of scale kick in,and profit takes a serious jump.

[okane]

Ate here for the first time tonight on Cuba St. Both the girlfriend and I reached the same verdict: 3/10.

The decor is amateurish and the music too loud and obnoxious. Bon Jovi 'Bad Medicine' at 100db I mean come on!

But the main thing wrong is the taste of the food: the burgers are too big, too expensive ($12 for a burger?) and taste flowery and under seasoned. Chips tasted old. The overall impression is everything is shipped in frozen and reheated. The food lacks freshness.

Only plus was the staff were friendly and helpful.

[winner69]

Ate here for the first time tonight on Cuba St. Both the girlfriend and I reached the same verdict: 3/10.

The decor is amateurish and the music too loud and obnoxious. Bon Jovi 'Bad Medicine' at 100db I mean come on!

But the main thing wrong is the taste of the food: the burgers are too big, too expensive ($12 for a burger?) and taste flowery and under seasoned. Chips tasted old. The overall impression is everything is shipped in frozen and reheated. The food lacks freshness.

Only plus was the staff were friendly and helpful.

Maybe take your girl to Dubai to see if better over there

[Dej]

Maybe take your girl to Dubai to see if better over there

Lol, not going to lie though, the burger fuel food has gotten worse over time, but obviously that is cutting costs to make a more profitable business. Its just like Hells Pizza IMHO.

I still go to these places, quality of the food is still good! Just not the same as it used to be.

Either way they are doing something right, and thats the main thing

[Banksie]

Lol, not going to lie though, the burger fuel food has gotten worse over time, but obviously that is cutting costs to make a more profitable business. Its just like Hells Pizza IMHO.

I still go to these places, quality of the food is still good! Just not the same as it used to be.

Either way they are doing something right, and thats the main thing

Another thing Burgerfuel offer, that most other fast food franchises don't, is their vegan and vegetarian options. There was a story recently doing the round about veganism growning 800% in Germany in the last 3 years...so this is definitely a market segment that needs to be catered to in the future.

[CJ]

But the main thing wrong is the taste of the food: the burgers are too big, too expensive ($12 for a burger?) and taste flowery and under seasoned.

$12 is for a top burger with more than half under $10. As you say they are big which makes the ~$7.60 McD Angus range look expensive.

I normally swap the bun for a lightweight bun as I try to cut down the carbs.

[Frankenstein]

I've spent the evening having a look at this stock after a couple of recommendations from the "Worth Researching" thread started by NBT today (great idea for a thread btw).

I'm struggling to understand the recommendation considering the astronomical P/E ratio - 83 according to the NZX website!!!

I'm interested to hear how others are valuing this stock?

Peter Lynch fair value gives me about 60 cents (using 20% growth rate which I believe is the max recommended for this method) and still less that $1.40 using a 50% growth rate.

DCF also gives me about 60 cents - but this is based on a lot of guesswork (plus I'm a complete DCF amateur so not very reliable). Plus BFW don't offer much (anything, right?) in the way of sales projections so hard to make any meaningful forecasts.

Ben Graham give me $1.60 (would ya look at that... the current SP!!!) using 50% growth rate which was about the growth rate of Net Income last annual.

Using Graham's formula with a 2014 EPS projection of $0.03 (a 50% increase on $0.02 from 2013 annual) and a 50% growth rate gives me a target price of $2.40.

I'm sure Graham wouldn't have gone near the stock with a P/E ratio of 83, however.

Would love to hear any feedback on these calculations. What value do others place on the company?

Cheers, -F-

[Food4Thought]

I don't know about the Calculations, but to me, the brand screams, EASY TO COPY, not worth the current price - over valued. Then again, some big monster may buy them out. That is how I read how they are expanding, they want a buy out. But they (starter uppers) know the current price is way over valued.... a flood of shares and the share would drop out

[CJ]

I put it down as a "Speculative Buy" just to put something a bit different out there.

I think their NZ expansion will kick off again. South Island stores are coming and more in the North Island too. After a disastrous start in Australia (wrong location and no brand recognition) they are considering this again. The Middle East is also huge. The sales from those stores hadn't flowed through into the profits last released so expect things there. They are also looking for new master franchisees to enter new countries. They have a very good system and can roll out fast once they find a premise and a franchisee.

Remember that expansion doesn't really cost them money, it makes them money, the Franchisee pays all the costs plus the franchise fee, training fee and project management fee.

As Moosie points out, the shares are tightly held. This is an issue as they have no debt and have very little need for new capital, but they cant sell existing capital as that would be a bad sign to the market. The Founders offloading to the likes of Milford is the only way they can do it as the positive of Milford counters the negative of Founders selling.

[Frankenstein]

Thanks for the replies.

I think if liquidity should somehow increase then we'd be seeing a drop in the SP - the low liquidity seems to be propping it up.

For me BFW isn't quite yet a BUY, but that's not to say the SP won't go higher. As you said CJ it's still speculative.

Will definitely revisit when the next financials are released - I expect these will show a solid increase in profits. Could easily show a doubling in profits (as they're not making much right now), halving that whopper (burger pun) of a P/E ratio. This growth seems to be largely priced in for the short term I'd say, so I'll be staying away for now and spending my hard earned on their burgers rather than their shares.

Was certainly worth researching!

-F-