|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads |  |
JANUARY 23, 2006
Outback: Set To Sizzle  When you invest in Outback Steakhouse (OSI
), you're not only putting your money where your mouth is. You're also buying into a venture-capital strategy that, say some pros, has turned Outback into an appetizing value play. This chain of 1,298 restaurants in 50 states and 21 countries is "in a turnaround mode that has also made it attractive on fundamentals," says Marion Schultheis of investment firm J. & W. Seligman, which owns shares. Its stock has sizzled from 34 in October to 44 on Jan. 11. Six weeks ago, Outback's new management introduced a low-priced "value menu" in the Midwest. The goal: rope in more baby boomers. "Early signs suggest the new menu is driving increased traffic," notes Schultheis. She figures Outback earned $2.26 a share in 2005 and will make $2.60 in 2006 and $3.10 in 2007, up from $2.08 in 2004. Howard Penney of Friedman, Billings, Ramsey says that for six years Outback has been investing in small startup eateries that have performed well. The deals have made the stock "extremely undervalued" based on a sum-of-the-parts assessment, he says. On assets alone, Penney figures, Outback is potentially worth 65 a share, his 12-month target. He says the smart-money crowd is bound to recognize the value of cash-rich Outback soon. Its unusual venture-capital strategy, he argues, has disguised the real value of Outback's restaurant assets.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.  By Gene G. Marcial
BW MALL
SPONSORED LINKS
Get BusinessWeek directly on your desktop with our RSS feeds.
Buy a link now! Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2006, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version