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PE news and earnings provided a boost to a few stocks yesterday on a poor day, overall, for restaurant stocks.

CPKI was up 9.6% on surging volume at yesterday’s close.  As the Wall Street Journal reported yesterday, private equity firm American Securities Capital Partners is in advanced talks to by the publicly-traded chain of 260 restaurants and is lining up debt financing, the Post reported.  Unless the number is low, which I doubt, the stock is fairly valued to overvalued.  At 7.1X EV/EBITDA, the stock is trading at a premium to the peer group at 6.6x. 

Anything can happen but, I think the bankers will struggle to get the deal done north of $18.50.  In addition, the laundry-list of issues any potential buyer of CPKI needs to deal with is long. 

MSSR seems like another potential, more reasonable, candidate.  At 4.9x EV/EBITDA, there is 21% upside to where its peers are trading.

TALES OF THE TAPE - stock 728

Howard Penney

Managing Director