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FRG

Franchise GroupNasdaqGM:FRG Stock Report

Market Cap

US$1.9b

7D

-5.3%

1Y

76.5%

Updated

30 Nov, 2021

Data

Company Financials +
FRG fundamental analysis
Snowflake Score
Valuation3/6
Future Growth2/6
Past Performance2/6
Financial Health1/6
Dividends1/6

FRG Stock Overview

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

Franchise Group Competitors

Intuit

NasdaqGS:INTU

US$184.7b

H&R Block

NYSE:HRB

US$4.2b

CBIZ

NYSE:CBZ

US$1.9b

Blucora

NasdaqGS:BCOR

US$788.8m

Price History & Performance

Summary of all time highs, changes and price drops for Franchise Group
Historical stock prices
Current Share PriceUS$47.75
52 Week HighUS$52.17
52 Week LowUS$25.28
Beta1.82
1 Month Change29.76%
3 Month Change36.43%
1 Year Change76.53%
3 Year Change311.64%
5 Year Change271.59%
Change since IPO223.73%

Recent News & Updates

Nov 16

Buy Fast Growing Franchise Group At A Bargain Price Ahead Of Accretive M&A

Franchise Group is a superbly managed, moderately levered, fast-growing business with an enviable M&A track record. Split roughly evenly between organic growth and acquisitions, the company is likely to grow EBITDA per share by 20% or more for many years. The company pays a substantial dividend, targeting 25% of EBITDA. The current $1.50 dividend is likely to be raised to $2 in 2022 and $3 in 2023. The stock is cheap at only 8x 2022 fully taxed FCF.

Shareholder Returns

FRGUS Multiline RetailUS Market
7D-5.3%-5.3%-2.8%
1Y76.5%23.0%20.0%

Return vs Industry: FRG exceeded the US Multiline Retail industry which returned 28.2% over the past year.

Return vs Market: FRG exceeded the US Market which returned 23.3% over the past year.

Price Volatility

Is FRG's price volatile compared to industry and market?
FRG volatility
FRG Average Weekly Movement6.8%
Multiline Retail Industry Average Movement7.4%
Market Average Movement6.0%
10% most volatile stocks in US Market15.0%
10% least volatile stocks in US Market2.3%

Stable Share Price: FRG is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: FRG's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
20106,421Brian Kahnhttps://www.franchisegrp.com

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.

Franchise Group Fundamentals Summary

How do Franchise Group's earnings and revenue compare to its market cap?
FRG fundamental statistics
Market CapUS$1.92b
Earnings (TTM)US$57.49m
Revenue (TTM)US$2.93b

33.5x

P/E Ratio

0.7x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
FRG income statement (TTM)
RevenueUS$2.93b
Cost of RevenueUS$1.64b
Gross ProfitUS$1.28b
ExpensesUS$1.22b
EarningsUS$57.49m

Last Reported Earnings

Sep 25, 2021

Next Earnings Date

n/a

Earnings per share (EPS)1.43
Gross Margin43.81%
Net Profit Margin1.96%
Debt/Equity Ratio167.3%

How did FRG perform over the long term?

See historical performance and comparison

Dividends

3.1%

Current Dividend Yield

105%

Payout Ratio

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 ($47.75) is trading below our estimate of fair value ($362.89)

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


Price To Earnings Ratio

PE vs Industry: FRG is poor value based on its PE Ratio (33.5x) compared to the US Multiline Retail industry average (20.7x).

PE vs Market: FRG is poor value based on its PE Ratio (33.5x) compared to the US market (17.1x).


Price to Earnings Growth Ratio

PEG Ratio: FRG's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: FRG is good value based on its PB Ratio (3x) compared to the US Multiline Retail industry average (3.8x).


Future Growth

How is Franchise Group forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

-16.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FRG's earnings are forecast to decline over the next 3 years (-16.6% per year).

Earnings vs Market: FRG's earnings are forecast to decline over the next 3 years (-16.6% per year).

High Growth Earnings: FRG's earnings are forecast to decline over the next 3 years.

Revenue vs Market: FRG's revenue (30.3% per year) is forecast to grow faster than the US market (10.1% per year).

High Growth Revenue: FRG's revenue (30.3% per year) is forecast to grow faster 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


Past Performance

How has Franchise Group performed over the past 5 years?

-31.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FRG has a large one-off loss of $88.3M impacting its September 25 2021 financial results.

Growing Profit Margin: FRG became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: FRG has become profitable over the past 5 years, growing earnings by -31.1% per year.

Accelerating Growth: FRG has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: FRG has become profitable in the last year, making it difficult to compare its past year earnings growth to the Multiline Retail industry (8.4%).


Return on Equity

High ROE: FRG's Return on Equity (10.1%) is considered low.


Financial Health

How is Franchise Group's financial position?


Financial Position Analysis

Short Term Liabilities: FRG's short term assets ($807.9M) exceed its short term liabilities ($554.4M).

Long Term Liabilities: FRG's short term assets ($807.9M) do not cover its long term liabilities ($1.6B).


Debt to Equity History and Analysis

Debt Level: FRG's net debt to equity ratio (142.3%) is considered high.

Reducing Debt: FRG's debt to equity ratio has increased from 79.6% to 167.3% over the past 5 years.

Debt Coverage: FRG's debt is not well covered by operating cash flow (11.9%).

Interest Coverage: FRG's interest payments on its debt are not well covered by EBIT (2.1x coverage).


Balance Sheet


Dividend

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

3.14%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: FRG's dividend (3.14%) is higher than the bottom 25% of dividend payers in the US market (1.33%).

High Dividend: FRG's dividend (3.14%) is low compared to the top 25% of dividend payers in the US market (3.57%).


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 7 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (104.8%), FRG's dividend payments are not 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?

2.1yrs

Average management tenure


CEO

Brian Kahn (47 yo)

2.08yrs

Tenure

US$5,060,006

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 ($USD5.06M) is above average for companies of similar size in the US market ($USD3.67M).

Compensation vs Earnings: Brian's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: FRG's management team is considered experienced (2.1 years average tenure).


Board Members

Experienced Board: FRG's board of directors are not considered experienced ( 2.4 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 not been meaningfully diluted in the past year.


Top Shareholders

Company Information

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


Key Information

  • Name: Franchise Group, Inc.
  • Ticker: FRG
  • Exchange: NasdaqGM
  • Founded: 2010
  • Industry: General Merchandise Stores
  • Sector: Retail
  • Market Cap: US$1.924b
  • Shares outstanding: 40.30m
  • Website: https://www.franchisegrp.com

Number of Employees


Location

  • Franchise Group, Inc.
  • 109 Innovation Court
  • Suite J
  • Delaware
  • Ohio
  • 43015
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/11/30 23:52
End of Day Share Price2021/11/30 00:00
Earnings2021/09/25
Annual Earnings2020/12/26


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.