Restaurant stocks are always a hot favorite among investors, especially when it is a growth stock. A great player in this industry is Popeyes Louisiana Kitchen Inc. (PLKI, Financial).
The company has posted unaudited fourth quarter results, including a 41.66% increase in global same-store sales. Further, the company has updated its fiscal 2015 guidance.
Founded in Atlanta in 1992, Popeyes Louisiana Kitchen is the franchisor and operator of Popeyes restaurants, the world's second-largest quick-service restaurant chicken concept based on number of units. Popeyes offers a Louisiana style menu that features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice and other regional items. The company's primary objective is to deliver sales and profits by offering excellent investment opportunities in its Popeyes brand and providing exceptional franchisee support systems and services to its owners. As of December, Popeyes had 2,539 operating restaurants in the U.S., three territories and 27 foreign countries.
Strong fourth-quarter results
On Jan. 12, Popeyes reported unaudited results for its fiscal fourth quarter and fiscal year, which ended Dec. 27, 2015. Global same-store sales increased 2.8% in the fourth quarter compared to the prior year period. In the reported quarter, Popeyes opened 54 domestic and 28 international restaurants, bringing full year 2015 openings to 219 restaurants, compared to 201 restaurants last year.
For the full year, the company’s global same-store sales increased 5.9%, and annual compounded two-year global same-store sales growth was 12.5%. The company permanently closed 53 restaurants in fiscal 2015, resulting in net unit growth of 166 restaurants, compared to 148 net restaurants in 2014.
Projections for fiscal 2015
Popeyes has updated its fiscal 2015 outlook based on its fourth quarter sales and store opening performance. The company now expects its reported earnings per diluted share in the range of $1.89 to $1.91. Further, adjusted earnings per diluted share are expected to be between $1.89 and $1.91 compared to $1.65 for the comparable prior-year period.
Growth and plans
Popeyes has provided seven years of consistent results, including four years of steadily increasing sales and unit growth. A chart has been provided below to show Popeyes’ restaurant count.
To attract more customers, Popeyes has initiated several plans as follows:
- To build distinctive brand.
- To run great restaurants.
- To grow restaurant profits.
- To accelerate quality restaurants.
- To maximize shareholder returns.
Further, the company has re-established standards and training, utilized expertise from heritage markets, defined new market goals, and for development, it has created market timing maps.
Popeyes' key strategies for the menu includes premium quality products, freshly prepared in-house, authentic Louisiana flavors, and competitively priced.
Management
In November 2015, Popeyes appointed Lizanne Thomas to its board of directors. Thomas is a lawyer, corporate governance expert and business leader with over 30 years of experience providing her expertise to top tier companies.
Recently, the company has also appointed Candace S. Matthews to its board of directors. Matthews has more than 30 years of experience in the consumer packaged goods, cosmetics, and beverage industries. She has been appointed to the board for her exceptional brand-building skills and leads a culture characterized by caring, collaboration and excellence.
(Source: Company website)
On a concluding note
Overall, Popeyes is a rock-solid company with the highly-franchised system, consistent and reliable cash flow, untapped international growth, strong unit economics and collaborative relationship with franchises.
Further, Popeyes' improvements in earnings and increasing its P/E multiple has driven its market capitalization and share price. Restaurant stocks are booming and with the recent quarterly release, the company is aiming for a better future and is all set to deliver a healthy menu to its investors. It is expected to create greater shareholder returns.
Disclosure: I do not hold any position in the company.
