Bloomin’ Brands Blossoms After Raising The Dividend

Key Points

• Bloomin' Brands rocketed higher on strong results and guidance. 
• The company raised its dividend by 71% and initiated a new buyback. 
• The stock is cheap and could double in price to match the multiple of competitor Texas Roadhouse. 

Bloomin’ Brands NASDAQ: BLMN is blossoming after years of rocky recovery in the post-pandemic world. The company just released results well above pre-pandemic levels and indicated business was thriving despite headwinds. The most telling detail of the report is the dividend. The company cut the dividend when the pandemic struck to preserve capital; it’s been back for a few quarters, but it just increased.

The company announced a 71% increase to the dividend that not only recovers the 2020 payout level but surpasses it, and there’s also a new buyback allotment. The buyback is worth another $125 million to shareholders or about 5.7% of the market, including the 11% post-release surge in share prices. 

“The 71% increase in our dividend as well as our new $125 million share repurchase authorization reflects our confidence in the strength of our cash flows,” said Chris Meyer, CFO. “Importantly, we continue to generate ample cash flow that will fund investments in our people and ongoing growth initiatives.”

Bloomin’ Brands Recovery Gains Momentum 

Bloomin’ Brands Q4 results echo news from other sit-down-oriented chains. While headwinds persist, momentum is building and it looks like 2023 could be a good year. Bloomin’ Brands reported $1.1 billion in revenue for the 4th quarter, up 4.8% versus the prior year, and well above Q4 2019. 

The only negative is that revenue missed the Marketbeat.com consensus estimate, but the difference is slim and mitigated by margin improvement. All segments posted growth versus last year, with the higher-end chains leading the way. The recovery was also strong in Brazil, which helped to underpin the results and suggests a sustained, system-wide recovery is possible. 

The company margin was strong as well. Not only did the margin hold up but, adjusted for 1-off restructuring costs, it grew despite continued cost pressure. The company says traffic, check sizes and productivity all played a role.

Regarding earnings, adjusted EPS of $0.68 is more than 1000 basis points better than last year’s figure and nearly double the take in 2019. In this light, the stock should be trading well above the 2019 levels and is on the way there now. 

The guidance is helping to lift the price action. The company is forecasting Q1 results in-line with the consensus estimate but for the full year to be much stronger. This means business is expected to improve from strong levels over the year. 

The Next Catalyst For Bloomin’ Brands Is The Analysts 

Marketbeat’s analyst tracking tools have yet to pick up any new commentaries, but they are on the way. The analysts have the stock pegged at a Moderate Buy, so the next ones should be bullish. A string of bullish commentaries, including upgrades and price target increases, could give the market what it needs to reclaim its all-time highs.

The stock trades at only 10X earnings which is a steal given the results, outlook and dividend. 

The chart is impressive. The stock is making a strong move upward on the monthly chart that confirms support at 2019 price levels. The next target for resistance is the all-time high, and that resistance may not last long. If broken, this stock could advance to the$35 range and trade at a more respectable multiple like its competitor Texas Roadhouse NYSE: TXRH.