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Category: Stock Market and Ark Restaurants
Date: 17 December 2019 Stock Price: $20.16 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Ark Restaurants, the restaurant group that owns 20 restaurants and 19 fast food concepts and catering operations
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About Ark Restaurants
Ark Restaurants owns and operates 20 restaurants and bars, 19 fast food concepts and catering operations primarily in New York City, Florida, Washington, D.C, Las Vegas, NV and the gulf coast of Alabama. Five restaurants are located in New York City, two are located in Washington, D.C., five are located in Las Vegas, Nevada, three are located in Atlantic City, New Jersey, three are located on the east coast of Florida and two are located on the Gulf Coast of Alabama. The Las Vegas operations include four restaurants within the New York-New York Hotel & Casino Resort and operation of the hotel's room service, banquet facilities, employee dining room and six food court concepts; and one restaurant within the Planet Hollywood Resort and Casino. In Atlantic City, New Jersey, the Company operates a restaurant and a bar in the Resorts Atlantic City Hotel and Casino and a restaurant in the Tropicana Hotel and Casino.
The operations at the Foxwoods Resort Casino in Ledyard, CT consist of one fast food concept. The Florida operations include the Rustic Inn in Dania Beach, Shuckers, located in Jensen Beach, the newly acquired JB's on the Beach in Deerfield Beach and the operation of five fast food facilities in Tampa, Florida and seven fast food facilities in Hollywood, Florida, each at a Hard Rock Hotel and Casino operated by the Seminole Indian Tribe at these locations. In Alabama, the Company operates two Original Oyster Houses, one in Gulf Shores, Alabama and one in Spanish Fort, Alabama.
The operations at the Foxwoods Resort Casino in Ledyard, CT consist of one fast food concept. The Florida operations include the Rustic Inn in Dania Beach, Shuckers, located in Jensen Beach, the newly acquired JB's on the Beach in Deerfield Beach and the operation of five fast food facilities in Tampa, Florida and seven fast food facilities in Hollywood, Florida, each at a Hard Rock Hotel and Casino operated by the Seminole Indian Tribe at these locations. In Alabama, the Company operates two Original Oyster Houses, one in Gulf Shores, Alabama and one in Spanish Fort, Alabama.
A few of Ark Restaurants locations
Overview of Ark Restaurants' 4th quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise:
(the data below is as reported for Q3 2019)
- Revenue: $41.688 million (up from $40.562 million for the same quarter of the previous year)
- Revenue increased by 2.8% over the last 12 months
- Total cost and expenses: $40.699 million (up from $39.636 million for the same quarter of the previous year)
- Total cost and expenses increased by 2.7% over the last 12 months
- Net loss $554 thousand (down from $1.007 million for the same quarter of the previous year)
- Diluted loss per share: -$0.16 (down from $0.29 for the same quarter of the previous year)
- Diluted number of shares outstanding: 3.486 million (down from 3.535 million for the same quarter of the previous year)
(the data below is as reported for Q3 2019)
- Cash and cash equivalents: $5.576 million
- Cash and cash equivalents per share: $1.579
- Cash and cash equivalents makes up 6.21% of Ark's total assets
- Cash and cash equivalents makes up 7.89% of Ark Restaurants' current market capital
- Accounts receivables: $3.7 million
- Trade receivables makes up 4.15% of Ark Restaurants' total assets
- Inventories: $2.25 million
- Inventories makes up 2.52% of Ark Restaurants' total assets
- Stockholders equity: $44.592 million
- Stockholders equity per share: $12.63
- Cash generated from operations (for the last 9 months) : $3.403 million
- Cash generated from operations per share (for the last 9 months): $0.96
Ark Restaurants' management commentary on the results and earnings guidance
NEW YORK, New York -- December 16, 2019 -- Ark Restaurants Corp. today reported financial results for the fourth quarter and fiscal year ended September 28, 2019.
Total revenues for the 13-weeks ended September 28, 2019 were $41,688,000 versus $40,562,000 for the 13-weeks ended September 29, 2018. The 13-weeks ended September 28, 2019 includes revenues of $2,141,000 related to JB's on the Beach in Deerfield Beach, FL which was acquired on May 15, 2019. The 13-weeks ended September 29, 2018 includes revenues of $906,000 related to Durgin-Park which was closed January 12, 2019.
Total revenues for the 13-weeks ended September 28, 2019 were $41,688,000 versus $40,562,000 for the 13-weeks ended September 29, 2018. The 13-weeks ended September 28, 2019 includes revenues of $2,141,000 related to JB's on the Beach in Deerfield Beach, FL which was acquired on May 15, 2019. The 13-weeks ended September 29, 2018 includes revenues of $906,000 related to Durgin-Park which was closed January 12, 2019.
On May 15, 2019, the Company, through a newly formed, wholly-owned subsidiary, acquired the assets of JB's on the Beach, a restaurant and bar located in Deerfield Beach, FL. The total purchase price was for $7,036,000. The acquisition is accounted for as a business combination and was financed with a bank loan from the Company's existing lender in the amount of $7,000,000 and cash from operations.
Management continually evaluates unfavorable cash flows, if any, related to underperforming restaurants. Periodically it is concluded that certain properties have become impaired based on their existing and anticipated future economic outlook in their respective markets. In such instances, we may impair assets to reduce their carrying values to fair values. Estimated fair values of impaired properties are based on comparable valuations, cash flows and/or management judgment. As a result of the underperformance and increased competition at Clyde Frazier's Wine and Dine, the Company has recorded an impairment charge of $2,857,000 for the year ended September 28, 2019 related to this property.
Management continually evaluates unfavorable cash flows, if any, related to underperforming restaurants. Periodically it is concluded that certain properties have become impaired based on their existing and anticipated future economic outlook in their respective markets. In such instances, we may impair assets to reduce their carrying values to fair values. Estimated fair values of impaired properties are based on comparable valuations, cash flows and/or management judgment. As a result of the underperformance and increased competition at Clyde Frazier's Wine and Dine, the Company has recorded an impairment charge of $2,857,000 for the year ended September 28, 2019 related to this property.
Ark Restaurants (NASDAQ: ARKR) stock price history
The image below, obtained from Google, shows the stock price history of Ark Restaurants over the last 5 years. And its been a pretty depressing and volatile time for Ark stockholders. 5 years ago the stock was trading at $21.20, and its currently trading at just over $20 a stock. So over the last 5 years Ark Restaurant stockholders lost % over the last 5 years.
Currently the stock of Ark Restaurants is trading at closer to its 52 week high of $21.60 than it is to its 52 week low of $17.75 which to us is a clear indication that the short term sentiment and momentum of Ark Restaurants is positive.
Currently the stock of Ark Restaurants is trading at closer to its 52 week high of $21.60 than it is to its 52 week low of $17.75 which to us is a clear indication that the short term sentiment and momentum of Ark Restaurants is positive.
Ark Restaurants (NASDAQ:ARKR) stock price history over the last 5 years
Recent coverage of Ark Restaurants
The extract below covers the latest regarding Ark Restaurants as obtained from Simpywall.st
The external fund manager backed by Berkshire Hathaway’s Charlie Munger, Li Lu, makes no bones about it when he says ‘The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital. It’s only natural to consider a company’s balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that Ark Restaurants Corp. (NASDAQ:ARKR) does have debt on its balance sheet. But is this debt a concern to shareholders?
Why Does Debt Bring Risk?Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well – and to its own advantage. The first step when considering a company’s debt levels is to consider its cash and debt together.
How Much Debt Does Ark Restaurants Carry?You can click the graphic below for the historical numbers, but it shows that as of June 2019 Ark Restaurants had US$27.2m of debt, an increase on US$21.4m, over one year. On the flip side, it has US$5.58m in cash leading to net debt of about US$21.6m.
Read the full article here
The external fund manager backed by Berkshire Hathaway’s Charlie Munger, Li Lu, makes no bones about it when he says ‘The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital. It’s only natural to consider a company’s balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that Ark Restaurants Corp. (NASDAQ:ARKR) does have debt on its balance sheet. But is this debt a concern to shareholders?
Why Does Debt Bring Risk?Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well – and to its own advantage. The first step when considering a company’s debt levels is to consider its cash and debt together.
How Much Debt Does Ark Restaurants Carry?You can click the graphic below for the historical numbers, but it shows that as of June 2019 Ark Restaurants had US$27.2m of debt, an increase on US$21.4m, over one year. On the flip side, it has US$5.58m in cash leading to net debt of about US$21.6m.
Read the full article here
Rustic Inn Fort Lauderdale Crabhouse
Ark Restaurants (NASDAQ: ARKR) latest stock valuation
So based on Ark Restaurants latest earnings report what are Ark Restaurants stock worth? Based on Ark Restaurants latest earnings report our valuation models places a target (full value) price of $17.70 a stock. (down from our 3rd quarter 2019 earnings report review of Ark Restaurants which reflects the group's worsening financial position). So while they are trading at below our target price (full value) price we would caution investors against investing in the company's stock until the group returns to sustained profitability and has a settled portfolio of restaurants (so no more selling off of restaurants and brands).
We usually recommend that long term fundamental investors or value investors look to enter a stock at least 10% below our target price which in this case is $17.70. A good entry point (once Ark Restaurants stabilise) would therefore be at $15.90 or below.
We suggest keeping away from Ark Restaurants until the dust settles with its portfolio.
We usually recommend that long term fundamental investors or value investors look to enter a stock at least 10% below our target price which in this case is $17.70. A good entry point (once Ark Restaurants stabilise) would therefore be at $15.90 or below.
We suggest keeping away from Ark Restaurants until the dust settles with its portfolio.
Next earnings release of Ark Restaurants
It is expected that Ark Restaurants will release their 1st quarter 2020 earnings report in early March 2020