Q: Groupe Dynamite released a very strong Q3 earnings report on Tuesday, with same store sales growth over 30%, earnings per share up 75% and declared a $2.30 special dividend. I have been building a position in this stock since September. What did you think of the earnings report and do you still think it has good upside potential over the next couple of years?
5i Research Answer:
31.6% same store sales growth is most impressive. GRGD also upped its sales guidance. We are not sure the company, as a growth story, 'needs' to pay a special dividend but investors may still like it. EPS was 72c, beating estimates of 55c; revenue of $363M beat estimates of $334M. EBITDA of $146M beat estimates by 43%. 2025 same store growth was raised to 25.5% + from below 20%. The balance sheet remains excellent. We think these results are going to get a lot of attention and the stock likely will maintain some mojo. We are pretty sure it can't grow at 32% forever, but certainly it is on a roll right now and investors should be very pleased here.