TSX:RECP

Stock Analysis Report

Executive Summary

Recipe Unlimited Corporation operates as a full-service restaurant company.

Rewards

Trading at 25.5% below its fair value

Earnings are forecast to grow 15.25% per year

Risk Analysis

Has a high level of debt

Unstable dividend track record

Large one-off items impacting financial results

Profit margins (4.4%) are lower than last year (8.4%)



Snowflake Analysis

Mediocre balance sheet and slightly overvalued.


Similar Companies

Share Price & News

How has Recipe Unlimited's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: RECP has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-2.2%

RECP

-1.4%

CA Hospitality

0.2%

CA Market


1 Year Return

-31.7%

RECP

12.5%

CA Hospitality

4.9%

CA Market

Return vs Industry: RECP underperformed the Canadian Hospitality industry which returned 12.5% over the past year.

Return vs Market: RECP underperformed the Canadian Market which returned 4.9% over the past year.


Shareholder returns

RECPIndustryMarket
7 Day-2.2%-1.4%0.2%
30 Day-1.7%-2.4%0.4%
90 Day-8.1%2.2%3.7%
1 Year-30.4%-31.7%13.3%12.5%8.2%4.9%
3 Year-23.5%-27.3%43.1%39.6%15.9%5.5%
5 Yearn/a7.5%5.2%33.8%14.3%

Price Volatility Vs. Market

How volatile is Recipe Unlimited's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Recipe Unlimited undervalued compared to its fair value and its price relative to the market?

25.5%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RECP (CA$18.43) is trading below our estimate of fair value (CA$24.72)

Significantly Below Fair Value: RECP is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: RECP is poor value based on its PE Ratio (20.5x) compared to the Hospitality industry average (18.3x).

PE vs Market: RECP is poor value based on its PE Ratio (20.5x) compared to the Canadian market (16x).


Price to Earnings Growth Ratio

PEG Ratio: RECP is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: RECP is overvalued based on its PB Ratio (2.9x) compared to the CA Hospitality industry average (1.6x).


Next Steps

Future Growth

How is Recipe Unlimited forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

15.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RECP's forecast earnings growth (15.3% per year) is above the savings rate (1.4%).

Earnings vs Market: RECP's earnings (15.3% per year) are forecast to grow faster than the Canadian market (10.7% per year).

High Growth Earnings: RECP's earnings are forecast to grow, but not significantly.

Revenue vs Market: RECP's revenue (0.7% per year) is forecast to grow slower than the Canadian market (4.9% per year).

High Growth Revenue: RECP's revenue (0.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if RECP's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Recipe Unlimited performed over the past 5 years?

12.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RECP has a large one-off loss of CA$34.0M impacting its September 29 2019 financial results.

Growing Profit Margin: RECP's current net profit margins (4.4%) are lower than last year (8.4%).


Past Earnings Growth Analysis

Earnings Trend: RECP has become profitable over the past 5 years, growing earnings by 12.1% per year.

Accelerating Growth: RECP's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: RECP had negative earnings growth (-40.1%) over the past year, making it difficult to compare to the Hospitality industry average (-12.4%).


Return on Equity

High ROE: RECP's Return on Equity (15.3%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Recipe Unlimited's financial position?


Financial Position Analysis

Short Term Liabilities: RECP's short term assets (CA$234.7M) do not cover its short term liabilities (CA$358.8M).

Long Term Liabilities: RECP's short term assets (CA$234.7M) do not cover its long term liabilities (CA$1.5B).


Debt to Equity History and Analysis

Debt Level: RECP's debt to equity ratio (160.5%) is considered high.

Reducing Debt: RECP had negative shareholder equity 5 years ago, but is now positive and has therefore improved.

Debt Coverage: RECP's debt is well covered by operating cash flow (38.5%).

Interest Coverage: RECP's interest payments on its debt are well covered by EBIT (7.4x coverage).


Balance Sheet

Inventory Level: RECP has a high level of physical assets or inventory.

Debt Coverage by Assets: RECP's debt is not covered by short term assets (assets are 0.4x debt).


Next Steps

Dividend

What is Recipe Unlimited's current dividend yield, its reliability and sustainability?

2.43%

Current Dividend Yield


Dividend Yield vs Market

company2.4%marketbottom25%1.9%markettop25%5.3%industryaverage2.5%forecastin3Years2.6%

Current dividend yield vs market & industry

Notable Dividend: RECP's dividend (2.43%) is higher than the bottom 25% of dividend payers in the Canadian market (1.89%).

High Dividend: RECP's dividend (2.43%) is low compared to the top 25% of dividend payers in the Canadian market (5.31%).


Stability and Growth of Payments

Stable Dividend: RECP has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: RECP's dividend payments have increased, but the company has only paid a dividend for 5 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (49.9%), RECP's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.6yrs

Average management tenure


CEO

Frank Hennessey (55yo)

1.8yrs

Tenure

CA$4,644,523

Compensation

Mr. Frank Hennessey has been Chief Executive Officer of Cara Operations Ltd since May 10, 2018. Mr. Hennessey served as the Chief Executive Officer and President of Imvescor Restaurant Group Inc. since Sep ...


CEO Compensation Analysis

Compensation vs Market: Frank's total compensation ($USD3.50M) is above average for companies of similar size in the Canadian market ($USD1.55M).

Compensation vs Earnings: Insufficient data to compare Frank's compensation with company performance.


Leadership Team

NamePositionTenureCompensationOwnership
Frank Hennessey
Chief Executive Officer1.8yrsCA$4.64mno data
Kenneth Grondin
Chief Financial Officer6.3yrsCA$3.35m0.047% CA$487.3k
Pierre Rivard
President of Groupe St-Hubert3.4yrsCA$652.27kno data
Dave Lantz
VP, General Counsel & Secretary0yrsno datano data
Julie Denton
Chief People Officer1.1yrsno datano data
Douglas Moffat
Executive VP0yrsno datano data
Grant Cobb
Senior Vice President of Casual Dining Division11.4yrsCA$459.41k0.16% CA$1.7m
Steven Pelton
Senior Vice President of Landing & Bier Markt4.6yrsCA$283.16kno data
Wayne Holm
President of Milestones Restaurants Inc0yrsno datano data
Kenneth Otto
Chief Development Officer & President of Family Dining Division5.4yrsCA$724.48kno data

4.6yrs

Average Tenure

55.5yo

Average Age

Experienced Management: RECP's management team is considered experienced (4.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
John Rothschild
Independent Director6.3yrsCA$85.00k0.038% CA$396.3k
Stephen Gunn
Independent Director6.9yrsCA$95.00k0.057% CA$594.5k
Michael Norris
Independent Director8.1yrsCA$85.00k0.048% CA$494.4k
David Aisenstat
Vice Chairman0yrsCA$16.25m0.14% CA$1.4m
Paul Jeffery
Chairman Emeritus of Kelsey’s International Inc0yrsno datano data
Christopher Hodgson
Independent Director4.8yrsCA$85.00kno data
Paul Rivett
Chairman of the Board0.08yrsno data0.0080% CA$82.9k
Sean Regan
Independent Director4.8yrsCA$85.00kno data
Christina Clark
Independent Director1.8yrsCA$54.49kno data

4.8yrs

Average Tenure

57yo

Average Age

Experienced Board: RECP's board of directors are considered experienced (4.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Recipe Unlimited Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Recipe Unlimited Corporation
  • Ticker: RECP
  • Exchange: TSX
  • Founded: 1883
  • Industry: Restaurants
  • Sector: Consumer Services
  • Market Cap: CA$1.039b
  • Shares outstanding: 56.38m
  • Website: https://www.recipeunlimited.com

Number of Employees


Location

  • Recipe Unlimited Corporation
  • 199 Four Valley Drive
  • Vaughan
  • Ontario
  • L4K 0B8
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RECPTSX (The Toronto Stock Exchange)YesSubordinate Voting SharesCACADApr 2015
305DB (Deutsche Boerse AG)YesSubordinate Voting SharesDEEURApr 2015

Biography

Recipe Unlimited Corporation operates as a full-service restaurant company. The company operates through four segments: Corporate Restaurants, Franchise Restaurants, Retail and Catering, and Central Operations. It operates and/or franchises restaurants under the Swiss Chalet, Harvey's, St-Hubert, The Keg, Milestones, Montana's, Kelsey's, East Side Mario's, New York Fries, Prime Pubs, Bier Markt, Landing, Original Joe's, State & Main, Elephant & Castle, The Burger's Priest, The Pickle Barrel, and 1909 Taverne Moderne brand names. As of December 30, 2018, the company operated 1,382 restaurants in Canada, the United States, Bahrain, China, Macao, Oman, Panama, Qatar, Saudi Arabia, and the United Arab Emirates. The company was formerly known as Cara Operations Limited and changed its name to Recipe Unlimited Corporation in May 2018. Recipe Unlimited Corporation was founded in 1883 and is headquartered in Vaughan, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 02:18
End of Day Share Price2020/02/18 00:00
Earnings2019/09/29
Annual Earnings2018/12/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.