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Fat Brands Inc (FAT)
NASDAQ:FAT
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Fat Brands
(NASDAQ:FAT)
Rating:47Neutral
Price Target:
$3.00
▲(10.29%Upside)
Fat Brands (FAT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$43.92M
Dividend Yield19.93%
Average Volume (3M)38.68K
Price to Earnings (P/E)―
Beta (1Y)0.68
Revenue Growth10.63%
EPS Growth-93.67%
CountryUS
Employees2,089
SectorConsumer Cyclical
Sector Strength66
IndustryRestaurants
Share Statistics
EPS (TTM)-2.32
Shares Outstanding16,550,997
10 Day Avg. Volume38,279
30 Day Avg. Volume38,684
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)-0.10
Price to Sales (P/S)0.00
P/FCF Ratio-0.62
Enterprise Value/Market Cap34.16
Enterprise Value/Revenue0.65
Enterprise Value/Gross Profit9.54
Enterprise Value/Ebitda13.87
Forecast
1Y Price Target
$12.50Price Target Upside359.56% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Fat Brands Business Overview & Revenue Model
Company DescriptionFAT Brands Inc. is a leading global franchising company specializing in acquiring, marketing, and developing fast-casual and casual dining restaurant concepts. Based in the United States, the company operates a diverse portfolio of restaurant brands, including Fatburger, Buffalo's Cafe, and Ponderosa & Bonanza Steakhouses, among others. FAT Brands is dedicated to delivering quality dining experiences across its various franchises, leveraging its well-established brands to expand its footprint both domestically and internationally.
How the Company Makes MoneyFAT Brands makes money primarily through franchise fees, royalties, and sales of food and beverage products. The company generates revenue by allowing independent operators to open and run restaurants under its various brand names, charging initial franchise fees and ongoing royalties based on a percentage of sales. Additionally, FAT Brands benefits from supply chain arrangements by coordinating the purchase and distribution of key ingredients and products to its franchisees, earning additional revenue in the process. Strategic acquisitions of complementary restaurant brands also play a vital role in broadening its portfolio and enhancing revenue growth.
Fat Brands Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -5.56%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant expansion efforts and strategic initiatives such as the Twin Peaks spin-off and co-branding success. However, these were offset by notable revenue declines, increased litigation expenses, and challenges in equity raises, painting a mixed outlook.Q1-2025 Updates
Positive Updates
Strong Momentum in Expansion
FAT Brands opened 23 units in Q1 2025, a 37% increase from Q1 2024, with plans to open over 100 new locations this year.
Twin Peaks Development and Spin-Off
Twin Peaks opened two new lodges, and FAT Brands spun off Twin Hospitality Group, distributing 5% of Twin Hospitality's Class A stock to shareholders.
Robust Franchise Development Pipeline
The pipeline includes commitments for over 1,000 new locations and potential for around $50 million in incremental annual adjusted EBITDA.
Digital Sales and Co-Branding Success
Great American Cookies and Marble Slab Creamery saw an 8% increase in sales via their new app, and the company successfully launched 10 co-branded models.
International Expansion
New partnership to open 30 Fatburger locations across France and 10 Buffalo's Cafe locations, demonstrating international growth.
Negative Updates
Revenue and Sales Decline
Total revenue for Q1 2025 was $142 million, a 6.5% decrease from $152 million in Q1 2024. System-wide sales were $571.1 million, down 1.8%.
Challenges in Twin Peaks Equity Raise
Volatile market conditions impacted the ability to secure the first tranche of a $75-$100 million equity raise, delaying debt reduction plans.
Increased Litigation Expenses
General and administrative expenses increased due to higher professional fees related to pending litigation.
Net Loss Increase
Net loss attributable to FAT Brands was $46 million or $2.73 per diluted share compared to a net loss of $38.3 million or $2.37 per share in the prior year quarter.
Smoky Bones Closures Impact
Revenue decline partially attributed to the closure of Smoky Bones locations for conversion into Twin Peaks lodges.
Company Guidance
During the FAT Brands Inc. First Quarter 2025 Earnings Conference Call, the company provided several key metrics and guidance for the remainder of the year. Revenues for Q1 2025 were $142 million, a 6.5% decrease from the previous year's $152 million. System-wide sales fell by 1.8% to $571.1 million, while adjusted EBITDA dropped to $11.1 million from $18.2 million. The company aims to open over 100 new locations in 2025, having already opened 23 in Q1, a 37% increase from the prior year. Additionally, FAT Brands is focused on debt reduction and plans to raise between $75 million and $100 million in equity, using 75% of these funds to reduce outstanding debt. The company is enhancing its production capabilities at its Georgia facility and anticipates increasing utilization to 60-70%. Moreover, co-branding initiatives are set to accelerate, with several new pairings planned for 2025. Despite current market volatility impacting the equity raise timeline, FAT Brands remains confident in achieving its annual targets and is committed to reducing SG&A expenses and leveraging growth opportunities.Fat Brands Financial Statement Overview
Summary
Fat Brands exhibits significant revenue growth but faces challenges with profitability, cash flow, and a highly leveraged balance sheet. Persistent negative earnings and liquidity issues present substantial risks, necessitating improvements in operational efficiency and debt management.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 | |||
| 592.65M | 480.46M | 407.22M | 118.88M | 18.12M | Gross Profit |
| 150.42M | 197.57M | 140.99M | 56.67M | 14.29M | EBIT |
| -52.22M | 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 | |||
| 23.38M | 37.04M | 28.67M | 56.66M | 3.94M | Total Assets |
| 1.29B | 1.39B | 1.21B | 1.27B | 121.14M | Total Debt |
| 1.47B | 1.38B | 1.12B | 1.01B | 97.92M | Net Debt |
| 1.45B | 1.34B | 1.09B | 955.50M | 93.98M | Total Liabilities |
| 1.74B | 1.64B | 1.37B | 1.29B | 163.03M | Stockholders Equity |
| -455.71M | -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 |
| -56.25M | -35.61M | -47.40M | 682.00K | -11.48M | Investing Cash Flow |
| -26.47M | -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
Positive
2.72
Price Trends
2.56
Positive
2.96
Negative
2.90
Negative
Market Momentum
-0.02
Negative
58.01
Neutral
62.73
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FAT, the sentiment is Positive. The current price of 2.72 is above the 20-day moving average (MA) of 2.44, above the 50-day MA of 2.56, and below the 200-day MA of 2.90, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 58.01 is Neutral, neither overbought nor oversold. The STOCH value of 62.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $37.80M | 13.99 | 21.75% | ― | 2.93% | 20.81% | |
74 Outperform | $61.71M | 15.24 | 6.48% | 1.51% | 9.38% | 14.76% | |
63 Neutral | $6.96B | 11.51 | 2.80% | 3.85% | 2.70% | -24.43% | |
53 Neutral | $36.33M | ― | -22.57% | 7.70% | -3.61% | -36.65% | |
47 Neutral | $43.92M | ― | 38.50% | 19.93% | 10.63% | -93.67% | |
43 Neutral | $117.41M | ― | 92.02% | ― | -1.68% | -140.83% | |
43 Neutral | $36.80M | ― | -978.37% | ― | -0.61% | -200.32% |
* Consumer Cyclical Sector Average
Performance Comparison
FAT
Fat Brands
2.72
-0.05
-1.81%
ARKR
Ark Restaurants
9.74
-5.15
-34.59%
BDL
Flanigan's Enterprises
32.68
5.30
19.36%
RAVE
Rave Restaurant Group
2.54
0.71
38.80%
RRGB
Red Robin Gourmet
6.02
-2.02
-25.12%
NDLS
Noodles & Co
0.85
-1.24
-59.33%
Fat Brands Corporate Events
DividendsBusiness Operations and StrategyFinancial Disclosures
Fat Brands Reports Q1 2025 Financial Results
Neutral
May 8, 2025
On May 8, 2025, FAT Brands reported its financial results for the first quarter of 2025, highlighting a 6.5% decline in total revenue to $142.0 million compared to the previous year. Despite the revenue drop, the company opened 23 new locations, marking a 37% increase from the previous year, and continued its international expansion with new agreements in France. The strategic spin-off of Twin Hospitality Group Inc. provided a $50 million dividend to shareholders, and the company is advancing towards a nearly 100% franchised model with plans to refranchise 57 Fazoli’s restaurants.
Executive/Board Changes
Fat Brands Announces Leadership Transition with New Co-CEO
Neutral
May 2, 2025
On April 29, 2025, FAT Brands Inc. announced the transition of Robert Rosen from Co-Chief Executive Officer to a consulting role, with Taylor Wiederhorn stepping in as the new Co-CEO alongside Kenneth Kuick. This leadership change is expected to leverage Wiederhorn’s extensive experience in franchise development and strategic growth, while Rosen will continue to contribute to the company’s financial strategies in a consulting capacity.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.