FRANCHISE GROUP INC (FRG)
US35180X1054 - Common Stock
Taking everything into account, FRG scores 3 out of 10 in our fundamental rating. FRG was compared to 126 industry peers in the Specialty Retail industry. Both the profitability and financial health of FRG have multiple concerns. FRG has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year FRG was profitable.
FRG had a positive operating cash flow in the past year.
In multiple years FRG reported negative net income over the last 5 years.
Of the past 5 years FRG 4 years had a positive operating cash flow.
1.2 Ratios
FRG has negative profitability rations, so we won't be analyzing them here.
FRG has a Return On Invested Capital (4.68%) which is comparable to the rest of the industry.
FRG had an Average Return On Invested Capital over the past 3 years of 7.05%. This is significantly below the industry average of 13.99%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | N/A | ||
| ROE | N/A | ||
| ROIC | 4.68% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)7.05%
ROIC(5y)7.75%
1.3 Margins
FRG has a Operating Margin (3.57%) which is comparable to the rest of the industry.
In the last couple of years the Operating Margin of FRG has declined.
FRG's Gross Margin of 39.81% is fine compared to the rest of the industry. FRG outperforms 62.88% of its industry peers.
FRG's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 3.57% | ||
| PM (TTM) | N/A | ||
| GM | 39.81% |
OM growth 3Y-4.9%
OM growth 5Y-15.6%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-6.31%
GM growth 5YN/A
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so FRG is destroying value.
Compared to 1 year ago, FRG has less shares outstanding
The number of shares outstanding for FRG has been increased compared to 5 years ago.
The debt/assets ratio for FRG is higher compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.63, we must say that FRG is in the distress zone and has some risk of bankruptcy.
FRG has a Altman-Z score of 1.63. This is in the lower half of the industry: FRG underperforms 65.91% of its industry peers.
A Debt/Equity ratio of 6.97 is on the high side and indicates that FRG has dependencies on debt financing.
FRG has a Debt to Equity ratio of 6.97. This is amonst the worse of the industry: FRG underperforms 80.30% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 6.97 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 1.63 |
ROIC/WACC0.63
WACC7.39%
2.3 Liquidity
A Current Ratio of 1.37 indicates that FRG should not have too much problems paying its short term obligations.
With a Current ratio value of 1.37, FRG perfoms like the industry average, outperforming 44.70% of the companies in the same industry.
A Quick Ratio of 0.60 indicates that FRG may have some problems paying its short term obligations.
The Quick ratio of FRG (0.60) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.37 | ||
| Quick Ratio | 0.6 |
3. Growth
3.1 Past
The earnings per share for FRG have decreased by -6.32% in the last year.
The Revenue has been growing slightly by 7.73% in the past year.
FRG shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 90.78% yearly.
EPS 1Y (TTM)-6.32%
EPS 3YN/A
EPS 5YN/A
EPS growth Q2Q-259.25%
Revenue 1Y (TTM)7.73%
Revenue growth 3Y221.37%
Revenue growth 5Y90.78%
Revenue growth Q2Q-5.14%
3.2 Future
FRG is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.08% yearly.
FRG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.12% yearly.
EPS Next Y-49.12%
EPS Next 2Y-5.22%
EPS Next 3Y-8.96%
EPS Next 5Y11.08%
Revenue Next Year0.34%
Revenue Next 2Y1.48%
Revenue Next 3Y2.42%
Revenue Next 5Y3.12%
3.3 Evolution
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 8.39, the valuation of FRG can be described as very reasonable.
FRG's Price/Earnings ratio is a bit cheaper when compared to the industry. FRG is cheaper than 76.52% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 25.02, FRG is valued rather cheaply.
The Price/Forward Earnings ratio is 9.34, which indicates a very decent valuation of FRG.
FRG's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. FRG is cheaper than 72.73% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.32, FRG is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.39 | ||
| Fwd PE | 9.34 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as FRG.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 11.9 |
4.3 Compensation for Growth
A cheap valuation may be justified as FRG's earnings are expected to decrease with -8.96% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y-5.22%
EPS Next 3Y-8.96%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 8.37%, FRG is a good candidate for dividend investing.
FRG's Dividend Yield is rather good when compared to the industry average which is at 3.49. FRG pays more dividend than 96.21% of the companies in the same industry.
FRG's Dividend Yield is rather good when compared to the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.37% |
5.2 History
The dividend of FRG is nicely growing with an annual growth rate of 33.91%!
FRG has been paying a dividend for over 5 years, so it has already some track record.
FRG has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)33.91%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
The earnings of FRG are negative and hence is the payout ratio. FRG will probably not be able to sustain this dividend level.
The dividend of FRG is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP-36.91%
EPS Next 2Y-5.22%
EPS Next 3Y-8.96%
FRANCHISE GROUP INC
NASDAQ:FRG (8/18/2023, 7:00:00 PM)
After market: 29.94 +0.06 (+0.2%)29.88
+0.03 (+0.1%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Discretionary Distribution & Retail
GICS IndustrySpecialty Retail
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap1.05B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.37% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
Avg EPS beat(4)
Min EPS beat(4)
Max EPS beat(4)
EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
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Min Revenue beat(4)
Max Revenue beat(4)
Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
Avg Revenue beat(12)
Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.39 | ||
| Fwd PE | 9.34 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)N/A
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | N/A | ||
| ROE | N/A | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 3.57% | ||
| PM (TTM) | N/A | ||
| GM | 39.81% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover1.21
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 6.97 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.37 | ||
| Quick Ratio | 0.6 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)-6.32%
EPS 3YN/A
EPS 5Y
EPS growth Q2Q
EPS Next Y-49.12%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)7.73%
Revenue growth 3Y221.37%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y