Franchise Brands (FRAN) AI Stock Analysis

• Market Cap: £271.48M
• Dividend Yield: 1.52%
• Average Volume (3M): 155.20K
• Price to Earnings (P/E): 34.3
• Beta (1Y): 0.49
• Revenue Growth: 15.22%
• EPS Growth: 1.23%
• Country: UK
• Employees: 646
• Sector: Industrials
• Sector Strength: 72
• Industry: Specialty Business Services
• EPS (TTM): 0.04
• Shares Outstanding: 193,784,070
• 10 Day Avg. Volume: 150,954
• 30 Day Avg. Volume: 155,200
• PEG Ratio: 0.36
• Price to Book (P/B): 1.40
• Price to Sales (P/S): 2.20
• P/FCF Ratio: 12.23
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £185.00
• Price Target Upside: 31.21% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: 159.00p ▲(12.77% Upside)

Franchise Brands' overall stock score is driven by its strong financial performance and positive corporate events, which reflect confidence in its strategic direction. The technical analysis indicates bullish momentum, although caution is warranted due to potential overbought conditions. The valuation is less attractive due to a high P/E ratio, but the company's fundamentals and leadership confidence provide a solid foundation for future growth.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective franchise management, supporting long-term business expansion.

Profitability Margins

High profitability margins reflect efficient operations and pricing power, which can sustain competitive advantage and shareholder value.

Cash Flow Management

Robust cash flow growth enhances financial flexibility, enabling reinvestment in growth opportunities and providing a buffer against economic downturns.

Negative Factors

Return on Equity

Low ROE suggests inefficiencies in generating returns on shareholder investments, potentially limiting attractiveness to investors.

Valuation Concerns

High valuation metrics may limit future stock price appreciation, impacting investor sentiment and potential capital raising efforts.

Leverage

While leverage is moderate, any increase could strain financial resources, affecting the company's ability to invest in growth or weather downturns.

Franchise Brands Business Overview & Revenue Model

Company Description

Franchise Brands (FRAN) is a multi-brand franchisor operating primarily in the fast-food and retail sectors. The company focuses on acquiring and managing a portfolio of franchise brands, providing franchisees with essential support services such as marketing, training, and operational guidance. Its core products and services revolve around the growth and development of its franchise network, which includes various well-known brands across different industries.

How the Company Makes Money

Franchise Brands generates revenue through multiple streams, primarily by charging franchise fees and ongoing royalties from its franchisees. The initial franchise fees are paid when a franchisee signs a contract to open a new location, and the company typically receives a percentage of the franchisee's gross sales as royalties, providing a steady income stream. Additionally, Franchise Brands may earn revenue from selling proprietary products or services to its franchisees, such as marketing tools, training programs, and operational support. Strategic partnerships with suppliers and vendors can also contribute to earnings through negotiated discounts or commissions, further enhancing the company’s overall revenue model.

Franchise Brands Financial Statement Overview

Summary

Franchise Brands demonstrates strong financial performance with consistent revenue growth and solid profitability margins. The company maintains a stable balance sheet with moderate leverage, and its cash flow position is robust, supporting future growth opportunities. While ROE could be improved, the company's financial fundamentals are sound, positioning it well within the specialty business services industry.

Income Statement

Franchise Brands has shown robust revenue growth, with a 14.81% increase from the previous year. The gross profit margin is strong at 59.85%, and the net profit margin has improved significantly, reflecting enhanced profitability. EBIT and EBITDA margins are healthy, indicating efficient operations and strong earnings before interest, taxes, depreciation, and amortization.

Balance Sheet

The company maintains a solid equity position with an equity ratio of 58.55%, indicating financial stability. The debt-to-equity ratio is moderate at 0.40, suggesting a balanced approach to leverage. Return on equity is reasonable at 3.33%, though there's room for improvement in maximizing shareholder returns.

Cash Flow

Franchise Brands has displayed strong cash flow management, with a notable 48.08% growth in free cash flow. The operating cash flow to net income ratio is impressive at 3.86, indicating efficient cash generation relative to earnings. Free cash flow to net income is also healthy, reflecting effective capital expenditure management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	139.78M	139.21M	121.27M	92.73M	57.69M	49.29M
Gross Profit	82.01M	83.32M	68.23M	30.79M	21.93M	20.93M
EBITDA	30.86M	32.81M	23.01M	14.25M	5.87M	5.88M
Net Income	7.91M	7.28M	3.04M	8.13M	4.23M	2.79M
Balance Sheet
Total Assets	367.32M	373.30M	382.44M	132.44M	67.27M	68.55M
Cash, Cash Equivalents and Short-Term Investments	7.54M	12.92M	12.28M	10.94M	9.05M	13.20M
Total Debt	78.88M	87.98M	94.56M	2.46M	2.53M	8.24M
Total Liabilities	146.85M	154.74M	168.05M	29.40M	19.94M	24.71M
Stockholders Equity	220.47M	218.56M	214.39M	102.38M	47.33M	43.84M
Cash Flow
Free Cash Flow	24.53M	25.02M	16.89M	6.27M	5.12M	4.46M
Operating Cash Flow	25.93M	28.16M	19.95M	7.73M	7.27M	5.24M
Investing Cash Flow	-2.55M	-2.71M	-51.44M	2.56M	-3.02M	-779.00K
Financing Cash Flow	-26.59M	-24.72M	33.11M	-8.74M	-8.40M	7.06M

Franchise Brands Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 141.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:FRAN, the sentiment is Neutral. The current price of 141 is above the 20-day moving average (MA) of 139.65, above the 50-day MA of 129.71, and above the 200-day MA of 137.16, indicating a neutral trend. The MACD of 3.22 indicates Positive momentum. The RSI at 53.29 is Neutral, neither overbought nor oversold. The STOCH value of 28.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:FRAN.

Franchise Brands Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KEYS	76 Outperform	£194.74M	20.00	56.75%	5.98%	16.29%	22.80%
FRAN	75 Outperform	£271.48M	34.31	3.61%	1.52%	15.22%	1.23%
BEG	69 Neutral	£183.46M	18.36	12.60%	3.91%	8.31%	305.88%
RST	66 Neutral	£367.64M	39.14	4.01%	2.24%	6.90%	145.00%
CPI	64 Neutral	£482.46M	27.56	9.00%	―	-4.87%	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
RWS	60 Neutral	£322.47M	-3.21	-12.00%	15.28%	-3.91%	-310.36%

Franchise Brands Corporate Events

Franchise Brands Reports Resilient Q3 Performance Amid Economic Challenges

Franchise Brands plc reported a resilient Q3 performance with expectations to meet full-year adjusted EBITDA market forecasts despite challenging economic conditions. The company has made significant strides in its One Franchise Brands initiatives to enhance integration and efficiency, supporting strong cash flow and deleveraging. Divisional performances varied, with steady demand in essential services and growth in specific sectors like Filta North America. The company is advancing its IT initiatives, which are projected to provide competitive advantages in 2026, positioning Franchise Brands well for future opportunities.

Franchise Brands Director Increases Stake with Share Purchase

Franchise Brands plc announced that Nigel Wray, a Non-executive director, purchased 50,000 Ordinary Shares at 120.0 pence per share, increasing his stake to 8.29% of the company’s issued share capital. This transaction reflects confidence in the company’s strategic direction and may influence stakeholders’ perception of Franchise Brands’ market positioning.

Franchise Brands Expands EBT Share Purchase Programme

Franchise Brands PLC has announced an update on its Employee Benefit Trust (EBT) share purchase programme, initially set at £5 million, with £1.4 million already funded. The company plans to purchase an additional £1 million in shares, citing the current share price as undervalued and aiming to mitigate the dilutive impact of share option awards. This strategic move could significantly affect daily trading volumes due to limited liquidity, potentially exceeding regulatory limits.

Franchise Brands Updates Executive Chairman’s Shareholding

Franchise Brands plc announced a correction to its previous disclosure regarding the shareholding of its Executive Chairman, Stephen Hemsley. Hemsley purchased 50,000 ordinary shares, increasing his total interest to 22,900,000 shares, which represents 11.82% of the company’s issued share capital. This transaction highlights Hemsley’s confidence in the company’s growth and strategic direction, potentially influencing stakeholder perspectives on the company’s future performance.

Franchise Brands Chairman Increases Stake in Company

Franchise Brands plc announced that its Executive Chairman, Stephen Hemsley, purchased 50,000 Ordinary Shares at an average price of 120.5781 pence per share, increasing his stake to 11.82% of the company’s issued share capital. This transaction underscores confidence in the company’s growth strategy and could positively influence stakeholder perception, reinforcing the leadership’s commitment to the company’s future.

Franchise Brands Chairman Increases Shareholding

Franchise Brands PLC announced that Stephen Hemsley, the Executive Chairman, purchased 50,000 ordinary shares of the company at an average price of 120.5781 pence per share. This transaction increases Mr. Hemsley’s total shareholding to 23,900,000 shares, representing 11.82% of the company’s issued share capital. The purchase reflects confidence in the company’s strategy and future growth potential, which could positively impact stakeholder perceptions and market positioning.

Franchise Brands CFO Completes Share Sale to Meet Tax Obligations

Franchise Brands PLC announced that Andrew Mallows, the company’s Chief Financial Officer, sold 81,776 ordinary shares at 126 pence each to meet a tax obligation from a previous employment. This transaction completes the sale of shares following the exercise of options under the company’s employee share schemes. Mr. Mallows retains 124,290 shares and holds options for an additional 776,288 shares. This move reflects the company’s ongoing commitment to transparency and regulatory compliance, while maintaining a strong leadership position within the industry.

Franchise Brands CFO Exercises Share Options to Meet Tax Obligation

Franchise Brands plc announced that Andrew Mallows, the company’s Chief Financial Officer, exercised options over 305,682 ordinary shares, selling 223,906 shares to meet a tax obligation from a previous employment. This transaction reflects internal financial adjustments and does not indicate a change in the company’s strategic direction or market operations. Mallows retains a significant shareholding and options, suggesting continued confidence in the company’s future performance.