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Granite City Food & Brewery Ltd. Message Board

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  • honda4everrrr honda4everrrr Nov 17, 2006 5:01 PM Flag

    Thoughts on KONA vs. GCFB

    They'll converge at some point - not sure when. If you use one industry metric of value for companies of this size, (1.4x rev) Kona should be valued at $70m or 12.00 per share and GC at $81m or $6.00.

    Both will grow their revenue base at comparable rates, but there is currently a significant difference.

    The differences at this point boils down to current capitalization. Kona has $20M in the bank to fund next year's new store growth, while GC is having to borrow money at 13% to do so. Obviously Kona at this point deserves to be valued at a premium to GC, but you may be right from the standpoint that Kona may be getting a little ahead of itself at this point.

    When GC does it's big secondary, (which will really be it's true IPO since they went public with only two stores) The capitalization issue will give GC the market cap it deserves.

    I probably wouldn't short Kona at this point, however I do believe it's currently overpriced. If Wall Street can see the forest thru the trees, GC should go to $6.00.

    People may gripe that GC is paying sky high interest to fund the expansion, but when they work their way thru it to get the store base up to a sustainable level, the reward will be less dilution

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    • I love reading your posts, I ended up with a substantial position in GCFB thru a private placement deal from 2 years ago but really know nothing about evaluating stock. I've been to the resteraunts and really liked them so kept the stock. I'm primarily interested in the real estate syndications (but if they go broke that would be a huge pain). I find your posts most informative and am still holding my stock.

      • 1 Reply to palmspringsjudy
      • Thanks for the compliment! I visited a location and really liked it. I visited it again and liked it even more. I by no means am an expert on these things but have learned alot by reading things and then re-reading them over and over again until I understand them. (or misunderstand them!) I've been in the market about 6 years but until I bought stock in this company I've never taken the time to fully analyze a company and read the boring details of a 10Q. Why I picked this one I don't know - maybe because it's small enough that I actually felt that I could get my hands around it so to speak. I've learned alot thus far, and it's made me a better investor.

        The partnership deals look like they're really going to work out for you. The stock - maybe even better! As we go forward things are beginning to become clearer. It's going to be a fun ride.

    • It is still a regional going- gc has a patent worth a premium-wait for national interest DAVID

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