A little out of my break to try to put into perspective the numbers of MTY. If the numbers are good, my view on the company, although still positive, is reduced.
The results announced today make me see this year's EPS to $ 0.90. This value is up compared to my previous expectations, but my vision of growth is sharply reduced. In my opinion, management does not enough importance to the growth component.
I do not mean that there is no growth. Simply that the company could act more quickly. It's like having a train that has a cruising speed of 125 km / h and is rolled to 80 km / h ... it does the job and that's fine, but we could have better performance.
On this, I want to clarify certain points in the press release. For example, we are told
For 2010, MTY has Already Realized icts objective of opening 75 new locations and Will Continue to Pursue The Growth of Existing ITS concepts.
Perhaps, but a few lines before we are told
79 new locations Were Added For the first six months of 2010, while 44 Existing leases Were closed, Representing a net addition of 35 rentals
[...] Note that the company has not made acquisitions for a long, that it has only 35 net additions in 6 months (with 1600 sites, we are talking about a capacity increase of 2.2%) and sales are down. How it
sales down you say!?!? Because in the industry of retail trade (such as catering), the most important is the Sami store sales, or sales in restaurants open more than a year. And on this point is lowered. Same store sales
declined, by 1.15% and 1.14% for The Second Quarter and Six Months Periods ended May 31, 2010, respectivement.
And let me just talk about recession. Here we compare the figures for Q2-2009 (in recession) than in Q2-2010.
What does this mean?
This means that MTY not getting its growing its existing businesses. Its growth came from adding new stores.
But we have just seen that MTY in internal development, adds only 2.2% of capacity in 6 months (about 4.5% per year). If we extrapolate crudely, this means 4.5% growth of -1.15% and falling sales. So 3.35% growth.
MTY should be more aggressive on the development of its banners or make acquisitions.
Without seeing these elements in MTY, a target of $ 19 as I was practically impossible to maintain. With the current growth from Country Style, I think $ 13.50 is a better target. With this target, the ratio of forward P / E is 15 ... a reasonable value for a company with ordinary growth.
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