Agree that the EV/EBITDA multiple at 8.99 isn't "high" but I do have some concerns on their returns. ROA is only 4.2%. Panera is roughly triple that. Over time, hard to get excited about investing in a company with that low of a ROA even if they lever it up to jack up the ROE.
Unless the cash burn rate changes, they appear to be on pace to run out of funds in 2-3 quarters unless they miraculously convince someone to inject even more equity into the company. At this point, I can't imagine anyone doing.
I can't explain why folks buy stocks that eventually go BK ...but they do...all the time. The financial facts shown on their cash flow statements are very concerning. When you look at the annual view on Yahoo finance, you'll find that for the fiscal years 2014, 13 and 12, they burned approximately $15.9 million, $9.1 million and $4.4 million respectively. This does not include the cash inflow from the sale of stock/rights...which won't be a tool they can use forever.
When you look at the first 2 quarters of this year, they burned $7.2 million in Q1 and another $3.6 million in Q2...not counting stock sales (which are diluting everyone). The challenge is that financial engineering can't save this company forever and they have to find a way to drive net income from operations. Note that they've lost $4 MILLION per quarter for the past 4 quarters. It's actually unreal how consistent the quarterly losses at the net income line have been.
They have a LONG way to go before they can get to breakeven at the operating income line and, even if they do, they have been spending roughly $2MM/year on capex. While they may not need all of that in the future, as long as they have company owned stores, they'll have to spend some capex just keeping the stores operating and relevant. I would never tell anyone not to buy something but I wouldn't use the college fund for this one. You're essentially buying a lottery ticket. Oh..one last thing...I wouldn't buy it based on speculation that someone will buy it. There isn't a concept out there that "needs" Cosi's footprint or operating platform and they don't own any of the real estate so there's no value there.
Maybe it will work out for you. I'm not a "basher" and I'm neither long or short the stock. However, I have followed it for many years and it's never made money in the history of the company. The gross margins are anemic and when you ask yourself the question "what would have to be true for this to make money and be positive cashflow", there aren't any realistic answers in my opinion. They are so far away from breaking even at the gross profit level and then they'd need a bunch more to cover SG&A and Capex. My concern is that they don't have enough critical mass to get this turned around. Personally, I believe this will be a Chapter 11 filing within 12-18 months. I don't say that with any sense of satisfaction; it's merely based at a review of their quarterly filings and projecting things out.