NasdaqGM:FRG

Stock Analysis Report

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Executive Summary

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


Snowflake Analysis

Mediocre balance sheet with moderate growth potential.


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 is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: FRG's weekly volatility has decreased from 13% to 6% over the past year.


Market Performance


7 Day Return

1.0%

FRG

9.1%

US Consumer Services

2.3%

US Market


1 Year Return

51.2%

FRG

36.1%

US Consumer Services

23.8%

US Market

Return vs Industry: FRG exceeded the US Consumer Services industry which returned 34.6% over the past year.

Return vs Market: FRG exceeded the US Market which returned 23.7% over the past year.


Shareholder returns

FRGIndustryMarket
7 Day1.0%9.1%2.3%
30 Day12.2%8.4%4.8%
90 Day25.5%9.2%14.5%
1 Year61.0%51.2%36.5%36.1%26.6%23.8%
3 Year225.1%190.9%56.5%50.9%45.0%35.4%
5 Year83.8%49.8%272.5%244.3%126.2%101.0%

Long-Term 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?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FRG ($32.14) is trading below our estimate of fair value ($80.49)

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


Price To Earnings Ratio

PE vs Industry: FRG is unprofitable, so we can't compare its PE Ratio to the US 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 overvalued based on its PB Ratio (3.2x) compared to the US Consumer Services industry average (2.7x).


Next Steps

Future Growth

How is Franchise Group forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

72.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FRG is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (2%).

Earnings vs Market: FRG is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: FRG's is expected to become profitable in the next 3 years.

Revenue vs Market: FRG's revenue (6% per year) is forecast to grow slower than the US market (10.6% per year).

High Growth Revenue: FRG's revenue (6% 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 FRG's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Franchise Group performed over the past 5 years?

-81.6%

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 81.6% 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 (10.6%).


Return on Equity

High ROE: FRG has a negative Return on Equity (-33%), 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 ($606.6M) exceed its short term liabilities ($537.9M).

Long Term Liabilities: FRG's short term assets ($606.6M) do not cover its long term liabilities ($966.1M).


Debt to Equity History and Analysis

Debt Level: FRG's debt to equity ratio (153.6%) is considered high.

Reducing Debt: FRG's debt to equity ratio has increased from 82% to 153.6% over the past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable FRG has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: FRG is unprofitable but has sufficient cash runway for more than 3 years, even with free cash flow being positive and shrinking by 0.5% per year.


Next Steps

Dividend

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

3.11%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: FRG's dividend (3.11%) is higher than the bottom 25% of dividend payers in the US market (1.38%).

High Dividend: FRG's dividend (3.11%) is low compared to the top 25% of dividend payers in the US market (3.85%).


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 6 years.


Current Payout to Shareholders

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


Future Payout to Shareholders

Future Dividend Coverage: FRG's dividends in 3 years are forecast to be well covered by earnings (39.3% payout ratio).


Next Steps

Management

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

1.3yrs

Average management tenure


CEO

Brian Kahn (46 yo)

1.25yrs

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 ($USD3.15M) is about average for companies of similar size in the US market ($USD3.86M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Brian Kahn
President1.25yrsUS$3.15m14.44%
$ 186.1m
Andrew Kaminsky
Executive VP & Chief Administrative Officer1.25yrsUS$1.90m0.055%
$ 710.4k
Andrew Laurence
Executive VP & Director3yrsUS$2.68m0.14%
$ 1.8m
Eric Seeton
Chief Financial Officer1.25yrsno data0.040%
$ 521.4k
Scott Terrell
Chief Information Officer1.42yrsno datano data
Martha O'Gorman
Chief Marketing Officerno datano datano data
Ryan Dodson
Chief Strategy Officer2.92yrsno datano data
Kenneth Evans
Chief Franchising Officer0.42yrno datano data
Kathleen Curry
Corporate Secretaryno datano datano data
Mark Baumgartner
Strategic Advisor2.58yrsUS$654.25kno data

1.3yrs

Average Tenure

47yo

Average Age

Experienced Management: FRG's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Brian Kahn
President1.25yrsUS$3.15m14.44%
$ 186.1m
Andrew Laurence
Executive VP & Director3yrsUS$2.68m0.14%
$ 1.8m
Thomas Herskovits
Independent Director2.83yrsUS$128.90k0.016%
$ 202.2k
Patrick Cozza
Independent Director2.67yrsUS$137.74k0.034%
$ 437.8k
Lawrence Miller
Independent Director2.67yrsUS$123.14k0.0090%
$ 116.3k
Matthew Avril
Independent Chairman of the Board0.83yrUS$103.14k0.27%
$ 3.5m
George Minner
Independent Director2.92yrsUS$132.19k0.0090%
$ 116.3k

2.8yrs

Average Tenure

64yo

Average Age

Experienced Board: FRG's board of directors are not considered experienced ( 2.8 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: 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 been substantially diluted in the past year, with total shares outstanding growing by 94.6%.


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$1.288b
  • Shares outstanding: 40.09m
  • 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
3HCDB (Deutsche Boerse AG)YesClass A Common StockDEEURJun 2012
FRGA.PNasdaqGM (Nasdaq Global Market)7.50% CUM PFD AUSUSDSep 2020

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 Sh...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/01/23 23:54
End of Day Share Price2021/01/22 00:00
Earnings2020/09/26
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.