Shares of Bojangles (BOJA), the chain of fast food restaurants, have begun trading on NASDAQ. The company had filed with the U.S. regulator for an IPO of its common stock just last month and was expecting to raise around $372 million. Shares soared 32% to $25 in the early afternoon trading. Profits also saw an increase of 7%, equating to $26 million in the same time frame. Employees began offering Cajun chicken filets with ham, cheese biscuits at the NASDAQ in Times Square to celebrate the great day.
Soaring share value
As the food chain made its debut in stock market trading on NASDAQ, shares opened at $27 on Friday. It was even traded at $25 by midday Friday. Around $147.3 million was raised as shares were priced at $19 per share on Thursday. This was at the high-end of the range given that the company had set a range of $18 to $19 for each share. Shares closed with a 25% gain that is at $23.75 at the end of Friday trading session. The market capitalization value of Bojangles currently is $682 million. Surprisingly, a major chunk of revenue, around 80% to be precise, is earned through drive-through and carry-outs. This shows that Bojangles has a lot of scope to grow and expand to greater heights. Clifton Rutledge, the CEO, said that it was a “great day” for the company. “It’s a landmark for our company, for all of our employees and our franchisees,” Rutledge further added that “As we went across the country to get ready for this, the confidence level we saw from the investors that we talked to about our story and our brand, it’s been overwhelming.”
Financial layout
Bojangles mainly offers products like fried chicken, biscuits and French fries also known as the cajun fries. Given that the company uses the persistent approach of increasing its sales during breakfast time, around 38% revenue was generated from daily sales before 11 am. Bojangles made $26 million for the full year 2014. Revenue from franchises brought in $629 million while own restaurants fetched a revenue of $407 million. The company has around 622 different restaurants located in ten various states, according to the IPO filing data. Annually, an expansion rate of 8% is expected. Sales saw an increase from $349 million in 2012 to $430 million in 2014, which is really a good sign. Most of the fast food chains that have made debuts trading on NASDAQ in the past year have seen quite good share performances. Shake Shack Inc. (SHAK) shares almost doubled on the first trading day after it closed at $45.90 while it was priced at $21 on the previous day. Noodles & Company (NDLS), El Pollo Loco Holdings Inc.Ă‚ (LOCO) and many other food chains performed very well on their first trading day.
Investors’ take
It seems that shareholders are not only tempted by the mention of French fries and chicken, but are also tempted with their share offerings. Within a few minutes of trading on Friday, Bojangles shares reached a high of $27.97. Most of the $147 million that has been raised from the IPO will go to its controlling shareholder, Advent International. Advent International is an American global private equity firm that has its headquarters in Boston, Massachusetts. Advent’s stake which was 94% before the IPO, fell directly to 74% after the offering. It seems that Bojangles will continue to do well as indicated by the stock performance on Friday as well as past financial performance. Net income increased 7.4% last year to $26 million while revenue increased 15% to $430.5 million. If the banks, who are underwriting the IPO, chose to buy the extra 1.16 million shares, the total proceeds could be further boosted. The response has been so overwhelming that some investors even went on to sell their stock of Twitter (TWTR) to buy the Bojangles stock. James Jacob, another investor said that since many other restaurant IPOs have performed well in the past year, he didn’t want miss the opportunity. He purchased a single Bojangle share for $24.99 and has revealed his decision to sell when the value touches $50. Investors surely have no reason to worry about their stocks not performing well. In recent trading, shares of the Charlotte-based restaurant increased 33% to settle at $25.26.
