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There are many reasons to view Bloomin’ Brands as an attractive investment candidate, and some recent insider activity highlights them. The activity, a noteworthy purchase by activist investor Starboard Value, confirms the thesis that Bloomin’ Brands is a play for value-oriented income investors and suggests significant total returns lie ahead.
Total returns, which include share price increases, dividends, and share repurchases, drive value for long-term investors. Bloomin’ Brands has the potential for earnings-driven share-price increases, a high dividend yield of 3.1%, and a substantial price-multiple expansion.
#1) Starboard Value Takes 9.9% Share in Bloomin’ Brands
Activist investor Starboard Value recently acquired a 9.9% stake in Bloomin’ Brands, confirming its interest in the company. Starboard has a history of engaging with restaurant businesses and actively seeking undervalued companies. This significant purchase indicates potential improvements and value unlocking initiatives for Bloomin’ Brands.
#2) Bloomin’ Brands Offers Value Within the Restaurant Industry
Despite the challenges faced by the restaurant industry, Bloomin’ Brands has shown that it has successfully navigated the post-pandemic environment. The company’s recent earnings reports indicate normalized business levels and widening margins. Bloomin’ Brands is also trading at a lower price-earnings multiple compared to its peers, making it an attractive value investment.
#3) There is a Catalyst for a Price-Multiple Expansion
The dividend is a significant catalyst for Bloomin’ Brands. With a yield of about 3.1%, the stock offers a competitive return. As an activist investor gets involved, there is a possibility of increasing the dividend payout, which could further enhance shareholder value. The company has already increased its payout twice since the pandemic and has a more sustainable distribution growth rate compared to competitors.
The Technical Outlook: Bloomin’ Brands Shows Support At Critical Level
Bloomin’ Brands’ price action has corrected from the post-pandemic rebound and is now finding support at critical levels. If the market confirms this support and initiatives from Starboard Value prove successful, the stock has the potential to continue its upward movement. Analysts predict a possible price-multiple expansion that could potentially double the stock price over the next 4 to 6 quarters.