Lets assume FY19 ebitda comes in at $45m - around the midpoint of forecast . A suiltable EV/ebitda multiple because of negative store/outlet growth and excessive debt should imo be no higher than 6 to 7 times imo. Just what sort of lease exposure are they up for and how long on these store/outlet closures ??. What sort of free cash flow are they getting now. Most of it i assume is for debt reduction and not store /outlet growth. I can't see assets being bought for higher than 8 times Ebitda imo.
RFG is currently trading at 6.8 times EV/ebitda assuming 183m shares on issue and $260m debt , current market cap of around $46m and achieving FY19 $45m ebitda .
It would be interesting to know if store/outlet margins have improved enough for people to take the risk of taking on a franchise or is negative sentiment still impeding store/outlet openings.
RFG Price at posting:
25.5¢ Sentiment: None Disclosure: Held
