Q: Thoughts on this stock? Looks like the management team is really good. What do you think of balance sheet, growth, valuation etc. Would you buy?
5i Research Answer:
HBFG is small but has done well. This year is weaker but it has shown good growth. It has been losing money up to last year. Sales are up 5-fold in three years, but the stock is expensive, trading at nearly 10x sales. The balance sheet is OK. Insiders own 18% and have been buyers in the past six months. Two analysts cover it ($2.58 target). While we like its prospects, its collection of restaurants and assets is a bit eclectic. We are not sure of all the synergies. But the valuation is what really gives us more pause. Expectations for continued growth are very high, and there is not much leeway if growth slows or if there is a recession. We would consider it risky at current levels.