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Famous Dave's of America Inc. Message Board

  • gflango gflango Nov 9, 2010 12:50 AM Flag

    Price drop since earnings

    There was nothing in the call that offers a simple explanation for this drop of a point or so since earnings came out. However, came across the Feltl downgrade press release of 28 October in which the analyst goes from Strong Buy to Hold and lowers price target from $12 to $10.50.

    Maybe somebody familiar with this firm or analyst has information to explain this dramatic revision of opinion.

    It may be that nothing has really changed with DAVE but, for various reasons, the company has lowered their internal cash targets, or at least pushed out the timing of reaching these targets, and this could play havoc with the analyst's valuation model.

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    • The analyst at Feltl said the earnings looked pretty good :

      Mark Smith, a stock analyst at Feltl & Co., said Famous Dave's earnings were a penny below his estimate, but its revenue was 3.8 percent higher than he expected.

      Smith said he was particularly encouraged by Famous Dave's sales at company-owned restaurants open for at least 24 months. That key same-store sales gauge was up 2.4 percent from a year earlier, the second consecutive quarter it's increased after several quarters of often steep decline.

      "Overall, (the quarter) looks pretty good," Smith said.

      • 1 Reply to jc_magical_mystery_tour
      • Thanks for your response to my post. Am finding it difficult to reconcile the new Feltl opinion ("hold" with 10.50 target) with the analyst's remarks you cited.

        While there was nothing specific in the call that explains the target price drop there may have been enough warning lights around franchise fees, gross margins and expansion plans such that, taken together, the analyst was prompted to bring in his cash flow projections a bit and, consequently, the expected price metrics.

        In general, I think DAVE is a good "mattress stock" for long-term investors and I remain quite positive on the concept. However, as a trader I was forced to sell yesterday when the stock lurched up on the buyback news.

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