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By Rayk Riechmann
A soft second quarter for our Twin Hospitality Group Inc. (Nasdaq: TWNP) is a short-term setback against a much more enticing view for the remainder of the year.
TWNP shares have trended lower since last week’s announcement of a 4.1% drop in revenue, largely due to legacy Smokey Bones locations that haven’t yet been converted to Twin Peaks. However, we believe that the market’s response creates a great entry point for two big reasons.
One is the arrival of new CEO Kim Boerema, who took the helm at TWNP on May 15th and will lead the execution of the company’s transformation. Mr. Boerema brings over three decades of restaurant industry experience across corporate and franchise business models to the table. With his proven ability to scale full-service brands and improve operational efficiency, the company has just what it needs and we are excited to see measurable results in the back half of the year.
Second, a stronger sports calendar including the football season is a powerful catalyst for guest engagement and foot traffic which should boost top line results. TWNP has a clear strategy to leverage the fall sports calendar and increase check sizes through weekly watch parties, gear promotions, live DJs and more.
When comparing LTM P/Sales ratios TWNP trades at a clear discount at 0.6x compared to peers at an average of 1.0x. As the company’s profitability profile improves, we expect this gap to narrow.
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