DMP
DMP downgrading, with the “accordingly, 2H has not improved on [pcp]”…
…but the market was there already given the string of downgrades. Below is the Bloomberg earnings outlook, where it would seem that 2H23 is already very slightly below both the previous half, and the prior corresponding period.
So now, you’ve got to decide if a) “ahah, this is the decisive action I was looking for, in recognition of a few underperforming stores/regions, and those sensible cost out initatives indicates a rightening of the ship, ergo it is off to the races as this former growth-manager market darling is back on track”…
or b) if you are witnessing narrative creep e.g. a thesis going from “difficult cycle, cycling strong comps, perhaps a mistimed/mis-calibrated price hike whilst consumers were expecting us to remain value concious” to “we have some serious performance issues across our network”….
Now, paying c30x for a turnaround in competitive QSR (quick service restaurants) is pretty aggressive, in general.
Pretending, for the sake of example, paying 30x for XRO as a moat-y/SASS-y “turnaround” or 30x for TPG as a non-discretionary open borders/rational-pricing “turnaround”, seems more understandable…
It will be interesting to see how it trades, today. How much is priced in? At this stage, I am not sure. That balance sheet could not withstand another downgrade, so there is smoke, if not fire.
Difficult to see, the future is.
Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.
This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.
Please note that past performance is not a reliable indicator of future performance.
General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.
Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.