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Cosi Inc. Message Board

  • kalien7 kalien7 Oct 28, 2013 12:34 PM Flag

    Enormous value - 20 bagger in 4 years

    This is an enormous value at 40M market cap. The number of stores they have in key locations alone gives this an intrinsic value around 200M. They have positive contribution margin and only need to streamline their SG&A about 1.5M/qtr which is doable. Even if they need a capital raise (diluting shareholders) it is still worth it and could even trade higher due to overall viability. I see an 800M market cap within 4 years (20x return) which would put it on par with Potbelly today. It simply takes a keen eye for value as well as patience. Cosi is a viable brand and getting in at these prices is a very savvy move, but will require holding over a multi-year time period for maximum returns.

    Sentiment: Strong Buy

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    • I'm not following your math on their income statement. Based on the annual income statement in Yahoo, their Gross Profit has been in the $11.2-$11.8 million range for the past 3 fiscal years. When you subtract "Other" and "non-recurring" (which are really recurring...just different categories but the dollars are real each year), you get a "contribution" to SG&A in FY12 of $7.2MM. Their SG&A was $11.6 million. Their quarterly SG&A is averaging $2.9 million for the past 2 years (trailing 4 quaters is $11.8 million vs. $11.6 million FY12) so they'd have to cut quarterly overhead 50% to get your numbers. While this may not be the best team, they've been cutting overhead (which includes advertising) already so I'm not sure a 50% cut is "doable". Even if they do, that gets a concept that has NEVER made money to simply breakeven. I don't see any value there. Finally, they don't have any owned real estate and it's not clear their leases have the value you've mentioned. I don't own a position in this (short or long) nor have I ever owned one.

    • wendy sold baja fresh to private equity for around $100,000 per store.

      wendy/arby's sold arby's to private equity for around $100,000 per store.

      this dang is valued at $40 Mil. u have 10x royalties = maybe $22 mil plus $8 Mil - $16 mil for existing stores count.

      what they needed is fresh idea that could stream line the menu, increase the food quality and serving speed. Instead they are the jacks of all trade from Italian to Asian and masters of none. This is incredibly dumb group of executives. Why? we will never find out.

 
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