Simple Concepts Research Group

GTIM Stock Has Returned Over 250%. Here’s What You Need To Know

by | Nov 12, 2021 | Stock Picks

Good Times Restaurants Inc. (GTIM) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Good Times Restaurants Inc. (GTIM) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Good Times Restaurants Fundamentals

GTIM Stock Rating

Stock Price Target: $12.04

Good Times Restaurants has returned over 250% to investors in the past year. In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Good Times Restaurants in comparison to the Restaurant/Dining industry and the S&P 500.

Good Times Restaurants is a Micro Cap company with a Market Cap of $63.80M.

How are investors using Good Times Restaurants earnings yield to assess the company?

Good Times Restaurants (GTIM stock)_ Earnings Yield in Comparison to the Restaurant_Dining Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Good Times Restaurants is 47.84%%, in comparison to 3.43% for the S&P 500 and 1.56% for the 10-year treasury bond. The median earnings yield for the Restaurant/Dining industry is 3.84%.

What does Good Times Restaurants Price-to-Earnings Ratio (P/E) tell investors about the company?

Good Times Restaurants (GTIM stock)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Restaurant_Dining Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Good Times Restaurants is currently trading at a P/E of 3.82. The P/E for the Restaurant/Dining industry is 58.91 and the P/E for the S&P 500 is 29.17.

What is the current Price-to-Sales Ratio (P/S) for Good Times Restaurants?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Good Times Restaurants is currently trading at a P/S of 0.57. The P/S for the Restaurant/Dining industry is 4.06 and the P/S for the S&P 500 is 3.17.

How does Good Times Restaurants Price-to-BookRatio (P/B) compare to the Restaurant/Dining industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Good Times Restaurants P/B ratio is 4.62. The P/B for the Restaurant/Dining industry is NA and the P/B for the S&P 500 is 4.93.

How attractive is Good Times Restaurants Return on Invested Capital (ROIC) to investors?

Good Times Restaurants (GTIM)_ Return on Invested Capital in Comparison to the Restaurant_Dining Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Good Times Restaurant ROIC is currently 20.68% in comparison to 7.24% for the Restaurant/Dining industry and 8.60% for the S&P 500.

What is Good Times Restaurants YTD Performance in comparison to its industry and the total market?

The year-to-date (YTD) performance is the amount of profit/loss realized by a stock since the first trading day of the current calendar year. 

The YTD performance for Good Times Restaurants is 78.95%. The Restaurant/Dining industry has a YTD performance of -5.53% in comparison to the YTD S&P 500 performance of 24.04%.

Good Times Restaurants (GTIM)_ YTD Performance in Comparison to the Restaurant_Dining Industry and the S&P 500

Recent Financial Results

  • Total Revenues increased 39.4% to $33.9M for Q3 2021 compared to the same prior-year quarter
  • Total Restaurant Sales for Bad Daddy’s restaurants increased $9.5M to $24.4M for the quarter
  • Compared to the third quarter of 2019, sales during the quarter increased by 14.3% at Good times and by 0.7% at Bad Daddy’s among restaurants that were open for the full quarter in both years
  • Total Restaurant Sales for Good Times restaurants were $9.3M for the quarter
  • Net Income Attributable to Common Shareholders was $13.6M for the quarter including approximately $11.8M in forgiveness of principal and interest amounts on Paycheck Protection Program (“PPP”) loans
  • Adjusted EBITDA for the quarter of $3.1M
  • $10.3M in cash and no borrowings outstanding under its senior credit facility

Stock Price Target: $12.04

Company Overview

GTIM Stock Rating

Good Times Restaurants operates in the restaurant business in the US. The company operates and franchises Good Times Burgers & Frozen Custard, an upscale quick-service drive-through dining restaurant and owns, operates, franchises, and licenses Bad Daddy’s Burger Bar, a full-service upscale casual dining restaurant.

As of December 020, the company franchised or licensed 37 Bad Daddy’s Burger Bar restaurants and 25 Good Times Burgers & Frozen Custard restaurants. Good Times was founded in 1987 and is based in Golden, Colorado. The current CEO is Ryan Zink.

Be sure to add Good Times Restaurants (GTIM) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.