NasdaqGM:FRG

Stock Analysis Report

NOT FOR DISTRIBUTION
Header cover image

Executive Summary

Franchise Group, Inc. operates as a retailer, franchisor operator, and acquirer of franchised and franchisable businesses.


Snowflake Analysis

Unattractive dividend payer and overvalued.


Similar Companies

Share Price & News

How has Franchise Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: FRG's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-13.4%

FRG

1.9%

US Consumer Services

1.9%

US Market


1 Year Return

117.3%

FRG

22.7%

US Consumer Services

4.3%

US Market

Return vs Industry: FRG exceeded the US Consumer Services industry which returned 22.7% over the past year.

Return vs Market: FRG exceeded the US Market which returned 4.3% over the past year.


Shareholder returns

FRGIndustryMarket
7 Day-13.4%1.9%1.9%
30 Day34.1%12.0%2.7%
90 Day188.2%32.3%26.4%
1 Year130.3%117.3%23.0%22.7%6.5%4.3%
3 Year85.9%64.0%82.2%75.0%35.1%26.2%
5 Year8.6%-11.3%207.1%184.2%67.0%48.4%

Price Volatility Vs. Market

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


Simply Wall St News

No news available

Valuation

Is Franchise Group undervalued compared to its fair value and its price relative to the market?

2.09x

Price to Book (PB) ratio


Share Price vs. Fair Value

Below Fair Value: FRG ($21.73) is trading above our estimate of fair value ($13.44)

Significantly Below Fair Value: FRG is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: FRG is unprofitable, so we can't compare its PE Ratio to the Consumer Services industry average.

PE vs Market: FRG is unprofitable, so we can't compare its PE Ratio to the US market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate FRG's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: FRG is good value based on its PB Ratio (2.1x) compared to the US Consumer Services industry average (2.2x).


Next Steps

Future Growth

How is Franchise Group forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

46.4%

Forecasted Consumer Services industry annual growth in earnings


In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as Franchise Group has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.

This is quite a rare situation as 97% of companies covered by SimplyWall St do have past financial data.


Next Steps

Past Performance

How has Franchise Group performed over the past 5 years?

-74.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FRG is currently unprofitable.

Growing Profit Margin: FRG is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: FRG is unprofitable, and losses have increased over the past 5 years at a rate of -74.9% per year.

Accelerating Growth: Unable to compare FRG's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: FRG is unprofitable, making it difficult to compare its past year earnings growth to the Consumer Services industry (18.3%).


Return on Equity

High ROE: FRG has a negative Return on Equity (-40.42%), as it is currently unprofitable.


Next Steps

Financial Health

How is Franchise Group's financial position?


Financial Position Analysis

Short Term Liabilities: FRG's short term assets ($671.0M) do not cover its short term liabilities ($680.4M).

Long Term Liabilities: FRG's short term assets ($671.0M) do not cover its long term liabilities ($1.0B).


Debt to Equity History and Analysis

Debt Level: FRG's debt to equity ratio (246.1%) is considered high.

Reducing Debt: FRG's debt to equity ratio has increased from 71.7% to 246.1% over the past 5 years.

Debt Coverage: FRG's debt is not well covered by operating cash flow (0.3%).

Interest Coverage: Insufficient data to determine if FRG's interest payments on its debt are well covered by EBIT.


Balance Sheet


Next Steps

Dividend

What is Franchise Group current dividend yield, its reliability and sustainability?

4.60%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: FRG's dividend (4.6%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: FRG's dividend (4.6%) is in the top 25% of dividend payers in the US market (4.49%)


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: FRG is paying a dividend but the company is unprofitable.


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?

0.8yrs

Average management tenure


CEO

Brian Kahn (46yo)

0.75

Tenure

US$3,149,732

Compensation

Mr. Brian R. Kahn, CFA, founded Vintage Capital Management, LLC in 1998 and serves as its Managing Partner and has been its Investment Manager since 1998, where he is responsible for all aspects of transac ...


CEO Compensation Analysis

Compensation vs Market: Brian's total compensation ($USD3.15M) is about average for companies of similar size in the US market ($USD3.11M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Brian Kahn
President0.75yrUS$3.15m6.18% $52.9m
Andrew Kaminsky
Executive VP & Chief Administrative Officer0.75yrUS$1.90m0.028% $243.3k
Andrew Laurence
Executive VP & Director2.5yrsUS$2.68m0.0052% $44.4k
Eric Seeton
Chief Financial Officer0.75yrno data0.032% $275.3k
Scott Terrell
Chief Information Officer0.92yrno datano data
Martha O'Gorman
Chief Marketing Officerno datano datano data
Ryan Dodson
Chief Strategy Officer2.42yrsno datano data
Kathleen Curry
Corporate Secretaryno datano datano data
Mark Baumgartner
Strategic Advisor2.08yrsUS$654.25kno data

0.8yrs

Average Tenure

47yo

Average Age

Experienced Management: FRG's management team is not considered experienced ( 0.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Brian Kahn
President0.75yrUS$3.15m6.18% $52.9m
Andrew Laurence
Executive VP & Director2.5yrsUS$2.68m0.0052% $44.4k
Thomas Herskovits
Independent Director2.33yrsUS$128.90k0.052% $446.7k
Patrick Cozza
Independent Director2.17yrsUS$137.74k0.034% $287.1k
Lawrence Miller
Independent Director2.17yrsUS$123.14k0.045% $381.7k
Matthew Avril
Independent Chairman of the Board0.33yrUS$103.14k0.31% $2.6m
George Minner
Independent Director2.42yrsUS$132.19k0.045% $381.7k

2.3yrs

Average Tenure

64yo

Average Age

Experienced Board: FRG's board of directors are not considered experienced ( 2.3 years average tenure), which suggests a new board.


Ownership

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


Insider Trading Volume

Insider Buying: FRG insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been substantially diluted in the past year, with total shares outstanding growing by 179.2%.


Top Shareholders

Company Information

Franchise Group, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Franchise Group, Inc.
  • Ticker: FRG
  • Exchange: NasdaqGM
  • Founded: 2010
  • Industry: Specialized Consumer Services
  • Sector: Consumer Services
  • Market Cap: US$855.323m
  • Shares outstanding: 39.36m
  • Website: https://www.franchisegrp.com

Number of Employees


Location

  • Franchise Group, Inc.
  • 1716 Corporate Landing Parkway
  • Virginia Beach
  • Virginia
  • 23454
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FRGNasdaqGM (Nasdaq Global Market)YesClass A Common StockUSUSDJun 2012

Biography

Franchise Group, Inc. operates as a retailer, franchisor operator, and acquirer of franchised and franchisable businesses. It operates through 4 segments: Liberty Tax, Buddy’s, Sears Outlet, and Vitamin Shoppe. The company provides tax preparation services in the United States and Canada; and franchises and operates rent-to-own stores that lease durable goods, such as electronics, residential furniture, appliances, and household accessories to customers. It also operates as a retailer primarily focuses on providing customers with in-store and online access to purchase new, one-of-a kind, out-of-box, discontinued, obsolete, used, reconditioned, overstocked, and scratched and dented products in various merchandise categories, including home appliances, mattresses, furniture, and lawn and garden equipment, at prices that are lower than list prices; and specialty retailer of vitamins, minerals, herbs, specialty supplements, sports nutrition, and other health and wellness products. The company was formerly known as Liberty Tax, Inc., and changed its name to Franchise Group, Inc. in September 2019. Franchise Group, Inc. was incorporated in 2010 and is based in Virginia Beach, Virginia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/07/02 00:04
End of Day Share Price2020/07/01 00:00
Earnings2020/03/28
Annual Earnings2019/12/28


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.