For those interested in Zoes, it looks as though it hit a double bottom and reached some kind of base. I averaged down early last week and as the fundamentals still look good and the chart seemed pretty alright. Would be interested in PH42’s take on this one.
Although ZOES iss down roughly 30% in a year, they still has a PE of 84. I would hold off throwing new money in until I see stability or improvement in same store sales. Last quarter they reported 4% SSS compared to 8.1% the quarter before. That was the biggest decelleration they had over the last 10 quarters. Regardless of how they are doing compared to other restaurants, I wouldn’t recommend dipping a toe until they demonstrate stability or improvement.
I love the concept, but sold half my position last quarter due to the SSS. I will start to get back in IF business solidifies.
I have been doing the sameness thing. In my opinion this is the best restaurant concept out there. Quite frankly, the only one I want to be invested in. I am a customer, and I know a thing or two about the Mediterranean kitchen. No, it is not that authentic, but it is tasty and healthy, and while the comps have dropped last quarter, my local ZOES are packed during lunch…I don’t see the drop in comps as a long term trend given what I see with my own eyes.
I sold out of BWLD and directed a big portion of my funds into ZOES as it continued on its way down (not something I normally do).
It’s just 4% of my portfolio so I am OK with the risk profile that the higher PE carries. Having a said that, higher PE used to scare me off, but within reason, my comfort levels have bettered over time as long as it’s balanced out in the rest of my portfolio.
I have got to stop posting at times when I am exhausted at the end of the week. The spelling and grammar are terrible.
I’ve been tempted to add to my tiny ZOES position since the current price is about what I initially bought at (Original: $25.72, 0.5% allocation).
But your (bulwnkl) comment about the PE and the S L O W improvement in profitability reminded me why I haven’t done so yet. Yeah, it’s a new concept, but that’s not sufficient reason to buy more in my mind.
There are other attractive restaurant concepts that I’d like to add to that have demonstrated solid profitability. No reason to reach for possibilities when I’ve got alternatives that are performers.
Not that my recent investing performance indicates great insight….
BTW, my PE is based on adjusted earnings not GAAP earnings. PE based on GAAP earnings is is 168. It’s pretty rich.
I still loves the concept, but AM sitting tight for now with 2%.
For those interested in Zoes, it looks as though it hit a double bottom and reached some kind of base.
Hi Ant, I haven’t followed Zoes for some time, but let me make a response to your question anyway.
If Zoes is back down where it was at the Feb 11 stock market crash bottom, the question isn’t “Did it make a double bottom?” (Who cares?), The question has to be "Has whatever made Zoes stock crash a second time like that, all the way down to the Feb 11 bottom, when the rest of the market is way up…has whatever that bad news was, changed? If not Zoes may certainly continue on down.
And now that I’ve read the entire thread, 4% same store sales growth certainly doesn’t warrant a PE of 84 or 168. No way. Just saying…be cautious!
What’s the ROIC, return on equity, etc.? The vuru.co site doesn’t have that data on this one, probably because of too short a history for their liking.