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Ignite Restaurant Group: A Stock With Great Potential

July 26, 2014 | About:
abirk

abirk

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Success is determined by the right moves you make. The restaurant industry is always a competitive nature and lots of players are competing with each other to grab a good position. As this industry is huge in nature, therefore investors may overlook some stocks that are really performing well. Ignite Restaurant Group Inc. (IRG) is one of the players which is performing well for the past few years.

With a market cap of $327.08 million, this Houston, TX- based company owns and operates three unique casual dining concepts; Joe's Crab Shack, Romano's Macaroni Grill and Brick House Tavern + Tap. Ignite also franchises Romano's Macaroni Grill in the United States and throughout the U.S. territories and foreign countries. Each brand offers a variety of high-quality, chef-inspired food and beverages in a distinctive, casual, high-energy atmosphere.

Tracking the Performance

On April 30, 2014, Ignite Restaurant reported financial results for the first quarter ended March 31, 2014. For the first quarter of 2014, total revenues were $214.9 million, compared to $118.2 million in the first quarter of last year which was mainly driven by the acquisition of the Macaroni Grill restaurants and new restaurant development. The company reported net loss and net loss per diluted share were $265,000 and $0.01, respectively. Net loss for the first quarter of 2014 included approximately $1.0 million of costs related to restaurant closures and losses on disposal of assets. Excluding the impact of these items, adjusted net income and adjusted net income per diluted share (which are non-GAAP financial measures) were $333,000 and $0.01, respectively, in the first quarter of 2014. Ignite Restaurant’s net income for the first quarter of 2013 was $2.2 million, or $0.09 per diluted share. The company incurred approximately $1.0 million of charges in the first quarter of 2013 related to the acquisition of Romano's Macaroni Grill, partially offset by a gain on insurance settlements. A chart has been provided below to show the company’s segment wise performance.

Growth

Ignite Restaurant has a strong national footprint and a base for international growth which is shown below.

In Joe’s Crab Shack, the company has initiated compelling menu for the customers. It also has elevated the service, atmosphere, and operations. Further, Ignite Restaurant has converted low performing Joe’s Crab into Brick House.

Transformations in the case of Romano's Macaroni Grill are also quite worth mentioning. It has accelerated the innovation with center plate proteins and pasta, daily specials, and braised meat. Wine is being served at every table. The company has also created a premium experience for its valued customers by providing traditional Italian greetings. In addition, it also shifted its advertising focus from network TV to national cable to expand its reach. Ignite Restaurant has also plans to convert underperforming Macaroni Grill restaurants to either Joe's or Brick House.

During the first quarter of 2014, the company closed two Macaroni Grill locations. For 2014, the company expects to open as many as three new Joe's Crab Shack restaurants and convert as many as five Macaroni Grill locations to Brick House Tavern + Tap restaurants.

On a Concluding Note

Ignite Restaurant has beaten the earnings estimates. Its strong performance has proved that there is no downward trend. Further, a chart has been provided below to show several reasons of investment.

Ignite Restaurant has designed its infrastructure to support multiple concepts without brand dilution. The company has also a great opportunity for next generation bar and grill to take the market share from its peers. The company’s prospects are also promising. In addition, the company has strong revenue growth, and restaurant count, which has been provided in the chart below.

Charts and figures from company website

If Ignite Restaurant Group can keep up this great momentum, then, there will be no looking back for this great player in the near future.


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