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This note was originally published February 13, 2013 at 15:02 in Restaurants


Bloomin’ Brands shares could be a good short at this price. 

Sentiment

Sell-side ratings on Bloomin’ Brands shares indicate a strong, bullish bias with 73% of analysts recommending buying the shares.  With casual dining sales trends deteriorating, we believe BLMN is a good candidate for investors looking for short ideas as earnings expectations are unlikely to rise from here.

The consensus Price Target, illustrated in the chart below, is below the price of the shares and we do not expect sentiment to rise much further.  Both the multiple (>1.5 turns above casual dining average) and the earnings estimate are not likely to have much upside. 

BLMN: Conflict On Wall Street - blmn target price

Private Equity Profit-Taking

Given that 66% of the company, or $2.5 billion in stock, is owned by private equity firms, it is unlikely that there will be a sea-change in sell-side ratings any time soon.  However, we would think that a private equity firm considering current sales trends would be glad to offload shares at $18, or 9.3x cash flow.

BLMN: Conflict On Wall Street - blmn valuation comp