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Fat Brands Inc (FAT)
NASDAQ:FAT
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Fat Brands
(NASDAQ:FAT)
35Underperform
Fat Brands (FAT) vs. S&P 500 (SPY)
Market Cap
$44.34M
Dividend Yield22.49%
Average Volume (3M)46.56K
Price to Earnings (P/E)―
Beta (1Y)0.65
Revenue Growth23.35%
EPS Growth-101.64%
CountryUS
Employees2,089
SectorConsumer Cyclical
Sector Strength55
IndustryRestaurants
Share Statistics
EPS (TTM)-11.60
Shares Outstanding16,521,885
10 Day Avg. Volume51,020
30 Day Avg. Volume46,556
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.09
Price to Cash Flow (P/CF)-1.30
P/FCF Ratio0.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.50Price Target Upside444.35% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Fat Brands Business Overview & Revenue Model
Company DescriptionFAT Brands Inc., a multi-brand franchising company, acquires, develops, and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts worldwide. As of August 22, 2022, it owned seventeen restaurant brands, including Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli's, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo's Cafe and Buffalo's Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean, and Ponderosa Steakhouse/Bonanza Steakhouse, as well as franchises and owns approximately 2,300 locations. The company was incorporated in 2017 and is headquartered in Beverly Hills, California. FAT Brands Inc. operates as a subsidiary of Fog Cutter Holdings, LLC.
How the Company Makes MoneyFat Brands makes money primarily through franchise agreements and royalties. The company generates revenue by selling franchise rights to independent operators who manage the day-to-day operations of the individual restaurants. Franchisees pay initial franchise fees to open new locations and ongoing royalties based on a percentage of their sales. Additionally, Fat Brands benefits from supply chain revenue by providing franchisees with proprietary products and ingredients. The company also earns from brand licensing agreements and sometimes directly operates a small number of company-owned restaurants. Strategic partnerships, marketing fees, and real estate leasing can also contribute to its revenue streams.
Fat Brands Financial Statement Overview
Summary
Fat Brands demonstrates strong revenue growth but suffers from profitability issues and a highly leveraged balance sheet. Negative cash flows further indicate liquidity problems, posing significant financial risks.Income Statement
Fat Brands has shown significant revenue growth over the years, especially from 2020 to 2024. However, the company struggles with profitability as indicated by negative EBIT and net income figures. The gross profit margin is reasonable, but the net profit margin remains deeply negative, suggesting persistent challenges in controlling costs and achieving operational efficiency.35
Negative
Balance Sheet
The balance sheet indicates a high debt-to-equity ratio due to negative stockholders' equity, which is a significant risk factor. The company's equity ratio is also negative, implying more liabilities than assets. This financial structure reflects a highly leveraged position, suggesting financial instability and potential difficulty in meeting long-term obligations.20
Very Negative
Cash Flow
Cash flow analysis shows consistent negative operating and free cash flows, highlighting liquidity issues. The operating cash flow to net income ratio is skewed by negative net income, indicating operational challenges. Despite financing activities providing some cash inflow, the company's cash flow position remains weak, with potential risks in sustaining operations without external funding.30
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 592.65B | 480.46M | 407.22M | 118.88M | 18.12M | Gross Profit |
| 199.52B | 197.57M | 140.99M | 56.67M | 14.29M | EBIT |
| -52.22B | 22.33M | 6.03M | -1.40M | -5.80M | EBITDA |
| -12.82M | 52.30M | 21.51M | 824.00K | -8.83M | Net Income Common Stockholders |
| -189.85M | -90.11M | -126.19M | -31.58M | -14.86M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 23.38B | 37.04M | 28.67M | 56.66M | 3.94M | Total Assets |
| 1.29T | 1.39B | 1.21B | 1.27B | 121.14M | Total Debt |
| 265.60B | 1.38B | 1.12B | 1.01B | 97.92M | Net Debt |
| 242.22B | 1.34B | 1.09B | 955.50M | 93.98M | Total Liabilities |
| 1.74T | 1.64B | 1.37B | 1.29B | 163.03M | Stockholders Equity |
| -455.71B | -255.86M | -159.18M | -21.66M | -41.88M |
| Cash Flow | Free Cash Flow | |||
| -79.05M | -57.11M | -70.57M | -9.74M | -11.94M | Operating Cash Flow |
| -56.20M | -35.61M | -47.40M | 682.00K | -11.48M | Investing Cash Flow |
| -26.50M | -59.80M | -12.50M | -723.20M | -36.58M | Financing Cash Flow |
| 58.20M | 118.55M | 28.74M | 815.23M | 55.24M |
Fat Brands Technical Analysis
Negative
2.48
Price Trends
3.26
Negative
3.14
Negative
2.95
Negative
Market Momentum
-0.14
Positive
37.97
Neutral
17.51
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FAT, the sentiment is Negative. The current price of 2.48 is below the 20-day moving average (MA) of 2.85, below the 50-day MA of 3.26, and below the 200-day MA of 2.95, indicating a bearish trend. The MACD of -0.14 indicates Positive momentum. The RSI at 37.97 is Neutral, neither overbought nor oversold. The STOCH value of 17.51 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FAT.
Fat Brands Risk Analysis
Fat Brands disclosed 38 risk factors in its most recent earnings report. Fat Brands reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Fat Brands Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $2.47B | 14.92 | 41.18% | 2.26% | 4.13% | 56.76% | |
68 Neutral | $6.50B | 25.41 | 2390.91% | ― | 13.67% | 69.41% | |
67 Neutral | $739.48M | 47.74 | 4.54% | ― | 1.81% | -15.53% | |
59 Neutral | $11.76B | 10.11 | -0.70% | 3.92% | 1.27% | -16.30% | |
56 Neutral | $329.15M | 4.99 | -42.81% | 9.69% | -2.26% | -32.36% | |
41 Neutral | $51.35M | ― | 92.02% | ― | -4.19% | -266.52% | |
35 Underperform | $44.34M | ― | 38.50% | 22.49% | 23.35% | -101.64% |
* Consumer Cyclical Sector Average
Performance Comparison
FAT
Fat Brands
2.48
-1.20
-32.61%
BJRI
BJ's Restaurants
31.78
-1.00
-3.05%
EAT
Brinker International
142.77
97.53
215.58%
DIN
Dine Brands Global
20.32
-19.68
-49.20%
RRGB
Red Robin Gourmet
3.06
-2.94
-49.00%
CAKE
Cheesecake Factory
45.31
12.70
38.95%
Fat Brands Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -27.70% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive strategic developments, such as the Twin Hospitality spin-off and revenue growth for the fiscal year, alongside challenges like decreased quarterly revenue, increased net loss, and performance issues with Smokey Bones. The company remains optimistic about its growth prospects but faces significant financial hurdles.Highlights
Twin Hospitality Group Spin-off
The spin-off of Twin Hospitality Group, including Twin Peaks and Smokey Bones restaurants, was completed. 5% of Twin Hospitality's Class A Common Stock was distributed to shareholders, amounting to a $50 million dividend.
Increase in Total Revenue for 2024
Total revenue for 2024 increased by 23.4% to $592.7 million, and system-wide sales increased by 3.1% to $2.4 billion.
Expansion and New Openings
92 new restaurants were opened in 2024, with a plan to open over 100 new locations in 2025. The development pipeline includes signed agreements for approximately 1,000 additional locations.
International and Non-Traditional Venue Growth
International locations for Johnny Rockets represent over 55% of the brand's footprint, with significant growth in Brazil and Mexico. New openings in non-traditional venues, such as theme parks and casinos, are also highlighted.
FAT Brands Foundation Growth
The foundation increased its giving by 36% in 2024, providing approximately $325,000 in grants across 17 states plus Washington, D.C.
Lowlights
Quarterly Revenue Decrease
Total revenue for the fourth quarter decreased by 8.4% to $145.3 million compared to the previous year, attributed to an incremental operating week in the prior year.
Net Loss Increase
Net loss for the fourth quarter was $67.4 million, compared to a net loss of $26.2 million in the prior year quarter.
Smokey Bones Performance Issues
Non-cash goodwill and other intangible asset impairment were recognized due to the decline in Smokey Bones' performance, contributing to a $30.6 million charge.
Decreased Same-Store Sales
Lower same-store sales were reported alongside the closure of Smokey Bones locations for conversion into Twin Peaks lodges.
Company Guidance
During the FAT Brands Inc. Fourth Quarter 2024 earnings call, key guidance metrics were discussed, emphasizing the company's strategic movements and financial performance. Notably, FAT Brands spun out Twin Hospitality Group, distributing 5% of its Class A Common Stock to shareholders, reflecting a $50 million dividend. The current basis in FAT Brands' stock, adjusted for dividends, is $2.74 per share. The spin-off aims to unlock the value of Twin Peaks, with shares valued at over $900 million, and reduce debt by $400 million. The company plans to decrease its debt by at least $75 million in 2025, including a $25 million reduction by late April. FAT's fourth quarter revenue decreased by 8.4% to $145.3 million due to an extra operating week in the prior year. System-wide sales also dropped by 7.4% to $580.2 million. However, on an annual basis, total revenue rose by 23.4% to $592.7 million, with system-wide sales increasing by 3.1% to $2.4 billion. The company opened 92 new restaurants in 2024 and plans to open over 100 in 2025, backed by a pipeline of 1,000 new units, expecting to generate $50 million in incremental annual adjusted EBITDA. The company is also focusing on cost reductions and refranchising, aiming to become almost 100% franchised, and it continues to explore strategic acquisitions to leverage manufacturing capabilities.Fat Brands Corporate Events
Business Operations and StrategyFinancial Disclosures
FAT Brands Reports Q4 2024 Financial Results
Neutral
Feb 27, 2025
On February 27, 2025, FAT Brands reported its financial results for the fourth quarter and full fiscal year 2024, which ended on December 29, 2024. The company experienced a decrease in total revenue by 8.4% in the fourth quarter compared to the previous year, attributed to an extra operating week in 2023 and lower same-store sales. Despite these challenges, FAT Brands expanded its footprint by opening 92 new restaurants in 2024 and signing over 250 new franchise agreements, increasing its development pipeline to 1,000 locations. The company also spun out Twin Hospitality Group Inc. as a separate publicly traded entity, aiming to maximize value creation for stockholders. Looking forward, FAT Brands plans to refranchise its company-owned locations, focusing on becoming nearly 100% franchised.
Financial Disclosures
Fat Brands Releases Investor Presentation with No Updates
Neutral
Jan 13, 2025
Fat Brands’ recent announcement involves information related to an Investor Presentation, which the company has released but does not intend to update or correct in the future. The announcement highlights that the company is not assuming any obligation regarding the materiality of the information shared, which may impact stakeholders’ perception of the company’s financial transparency.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.