Is Bloomin’ Brands Stock’s Valuation as Appetizing as it Appears?

2022 hasn’t been bad at all for BLMN

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Bloomin' Brands, Inc. (NASDAQ:BLMN) stock is down 3.2% at $23.69 today, set to close below the recently supportive 10-day moving average for the first time since January. The stock has shown a bit of resiliency against the volatility markets have been seeing, though, boasting a year-to-date return of 12% and hitting its highest settlment in over three months just a few sessions earlier. What's more, BLMN also offers a dividend yield of 0.56% with a forward dividend of $0.14.

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Despite the stock's outperformance, short sellers have been zeroing, with short interest inching 3.2% higher during the last reporting period and now making up almost 18% of the stock's available float. It would take over seven days to cover these bearish bets, at BLMN's average daily pace of trading, which could lead to a short squeeze, should some of these shorts begin to jump ship. 

Meanwhile, BLMN's Schaeffer's Volatility Index (SVI) of 50% sits in the relatively low 30th percentile of its annual range. This implies that options traders are pricing in lower volatility expectations for the equity, making now a good time to speculate on the stock's next move with options. 

Moreover, Bloomin’ Brands stock's most attractive aspect from a fundamental point of view is undoubtedly its valuation. BLMN trades at a forward price-earnings ratio of 10.27 and a price-sales ratio of 0.65, which are both cheap valuations by most standards. In addition, Bloomin’ Brands has grown its annual revenues 30% and has increased its annual net income by $378 million since fiscal 2020, after reporting $162 million in net losses that year. Bloomin’ Brands is also estimated to grow earnings 16.4% and revenues 4.9% for fiscal 2022.

However, BLMN's revenue growth rate has been unimpressive over the course of the years, with its fiscal 2021 revenues down slightly in comparison to fiscal 2018. The restaurant holding company also offers very little long-term security due to the large amount of debt held on the balance sheet. BLMN currently has $2.15 billion in total debt and just $87.58 million in cash. In general, Bloomin’ Brands stock could be decent option to hold in 2022 but may be too much of a liability as a long-term investment.

 

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