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Takeaway: Recent activist news in the restaurant space has us wondering what company could be next. BLMN looks appetizing & may garner some interest.

With news of potential activist activity hitting DRI yesterday, we thought it might be worthwhile to point out that BLMN is another multi-branded casual dining company that may garner some additional attention from the investment community.

Its important to note that there is a big difference between DRI and BLMN - the management team.

That being said, BLMN needs to go easy on the unit growth story.  In our view, the street will never give the company credit for it and excessive growth will only get them in trouble.    

Highlighted in our SOTP analysis below, it is very likely that the parts are greater than the whole, at Bloomin’.

BLMN: DIFFERENT HOUSE, SAME NEIGHBORHOOD - chaisn

Leaving the asset value aside, however, we would not be buyers of BLMN heading into its 3Q13 print.  Sales trends for the casual industry have been sluggish of late, and BLMN is not immune to these secular trends.  Highlighted in the table below, 3Q13 same-store sales estimates have actually come down for the majority of BLMN’s brands since last quarter.  We would argue, however, that they have not come down enough.  Additionally, BLMN has previously guided to a very strong 4Q13, which we just don’t see happening.  We believe it is likely that management will guide down when they report 3Q13 results.

BLMN: DIFFERENT HOUSE, SAME NEIGHBORHOOD - 10 9 2013 4 52 30 PM

Howard Penney

Managing Director