Benihana (BNHNA): Another Ignored Restaurant

Last January, Scott Rothbort recommended Benihana (BNHNA) when it was trading around $2.30. It's roughly doubled since then.

For the last month, leading into some good earnings, the stock has been on a tear -- doubling. Despite the big move up and hitting Scott's earlier target, I would hang on to it from here.
It's significantly lagged other consumer restaurant chains over the past year, even with its move in the last month. The trailing Enterprise Value to EBITDA multiple is 2.7x vs. PF Chang's China Bistro (PFCB) at 6.8x. BNHNA has a much heavier debt-load relative to its cash than PCFB. But in this environment, with some positive earnings, a further doubling in shares from here isn't unreasonable. The stock is up big today, so you might want to wait for a better entry.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider BNHNA to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

Position: None.

Originally published in RealMoney.com on 4/24/2009 2:01 PM EDT

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As Restaurants Stay Hot, Watch MRT and RUTH

Two months ago, the only restaurant investors were talking about was McDonalds (MCD). Within the last month, many other restaurant chains have outperformed the market handily, such as Darden (DRI) and Panera Bread (PNRA).

Yesterday, we saw stand-out numbers for casual diner PF Chang's China Bistro (PFCB) and a great move for Buffalo Wild Wings (BWLD).

So, which restaurants might be next to join the party? More business-oriented ones such as Mortons (MRT) and Ruth's Chris (RUTH). Both cater to the business exec entertaining clients. They've suffered with the general downturn even more than the consumer-oriented chains. Turns out the business execs (or at least their CFOs) are more frugal about their steaks than families are about going out for a sit-down at their local Olive Garden in tough times.

Looking at MRT and RUTH, you can see both have lagged other chains over the last 6 - 12 months. If things continue to stabilize in the broader economy, look for these two to make a comeback relative to their consumer-oriented peers. RUTH has already made a good move in the last month (but beware its debt levels).

Position: None.

Originally published in RealMoney.com on 4/23/2009 3:35 PM EDT

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PFCB over CMG

My favorite restaurant chain at the moment is PF Chang's China Bistro (PFCB). Admittedly, I should have posted this yesterday instead of today (before the strong earnings results). Even still, the stock in my view has similar fundamentals to CMG, but is so much cheaper.

It's only a 5.7x Enterprise Value to EBITDA vs. 13x for CMG. CMG has better operating margins (10% vs. 4%) but PFCB's return on equity is close to CMG (11% vs. 13%). CMG has more cash, but it's pricey.

Even after a 20% pop today on the back of a good earnings report, PFCB looks good to me.

Originally published in RealMoney.com on 4/22/2009 2:57 PM EDT

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