Stock Alert for Sirius XM Radio Inc. (SIRI)
  • Stock Alert for Spanish Broadcasting System Inc. (SBSA)
  • Stock Alert for Arena Pharmaceuticals Inc. (ARNA)
  • " />

    Stock Alert for O’Charley’s Inc. (CHUX)

    O’Charley’s Inc. (CHUX) is a multi-concept restaurant company that operates or franchises a total of 342 restaurants under three brands: O’Charley’s, Ninety Nine Restaurant, and Stoney River Legendary Steaks. The O’Charley’s concept includes 227 restaurants in 18 states in the Southeast and Midwest, including 221 company-owned and operated O’Charley’s restaurants, and six restaurants operated by franchisees. The Ninety Nine concept includes 105 restaurants throughout New England and upstate New York. The Stoney River Legendary Steaks concept includes 10 restaurants in six states in the Southeast and Midwest.

    Share Statistics (06-Feb-12)   FY












    Symbol CHUX Revenue, $Mn 866.27 830.11 -4.2% 188.64 186.59 -1.1%
    Current price $9.81 Gross marg. 15.8% 13.7% -13.3% 12.3% 11.6% -5.7%
    52wk Range: $4.51-$7.99 Oper. margin -2.1% -0.3%
    Avg Vol (3m): 87,329 Net margin -0.8% -4.2% 425.0% -3.9% -2.1% -46.2%
    Market Cap. 215.51M              
    Shares Outstanding 21.97M EPS, $ 0.13 -0.71 -646.2% -0.25 -0.16 -36.0%

    Source:, SEC Filings.

    Investment Highlights

    O’Charley’s Inc. (CHUX) saw an interesting spike in Monday trade following news the Company would be acquired by Fidelity National Financial Inc. (NYSE: FNF).  CHUX gained $2.89, or 41.76%, to close at $9.81, with close to 17.5 million shares exchanged. Yesterday’s trading volume was over 265 times the 10-day average.

    Shares of the Nashville, Tenn.-based restaurant operator have gained 50.0% in the last five days; 75.2% in the last month; and 51.2% year-to-date.

    According to the release, FNF will pay $9.85 a share to buy CHUX, which values the Company at $221 million. The proposed price represents a premium of 42% over CHUX’s closing price of $6.92 on February 3, 2012.

    Florida-based title insurer FNF said it has been seeking an investment in a larger, scalable, strategic restaurant operating company to complement its successful investment in American Blue Ribbons Holdings LLC (ABRH).  “There is a real opportunity to continue to improve the operating performance at O’Charley’s and to build on their current momentum. We look forward to having the ABRH and O’Charley’s teams working toward that end,” commented FNF chairman William P. Foley II.

    “This transaction provides a number of benefits, including, for our shareholders, a substantial and immediate cash value for their shares,” said CHUX CEO David Head. “We believe FNF’s expertise and commitment to long-term growth will enable O’Charley’s Inc. to complete its turnaround and achieve its growth objectives, benefiting our employees, guests, business partners and other stakeholders.”

    The deal is expected to close in the second quarter, assuming execution of the tender process and satisfaction of the conditions to closing.


    Financial Summary

    Also on Monday, CHUX reported its results for the fourth quarter and full year ended December 25, 2011.

    The Company posted revenue of $182.2 million, a decline of 0.7% from $183.5 million for the fourth quarter of 2010.  CHUX attributed the result to fewer restaurants in operation for the fourth quarter of 2011 compared to the fourth quarter of the prior year. Blended comparable sales increased 1.1%  for the quarter – the fourth consecutive quarterly increase. Blended comparable sales for full-year 2011 grew 1.7%, based on an increase of 0.3% for O’Charley’s, 3.9% for Ninety Nine Restaurants and 7.2% for Stoney River Legendary Steaks.

    CHUX realized a loss from continuing operations of $8.2 million, or $0.38 per diluted share, for the fourth quarter of 2011, an improvement from a loss of $16.4 million, or $0.77 per diluted share, for the fourth quarter of 2010.  The Company ended the year with a $12.1 million loss, narrowing from $34.9 million a year earlier.

    Net cash provided by operating activities was $19.0 million for fiscal 2011, and at the quarter’s end, the Company had $18.6 million of cash, no funded debt and its $30 million revolving credit facility remains undrawn.


    Financial Strength (06-Feb-2012)




    S&P 500

    Quick Ratio (MRQ) 0.86 0.97 1.09 0.59
    Current Ratio (MRQ) 0.99 1.10 1.34 0.92
    LT Debt to Equity (MRQ) 66.29 47.68 60.46 95.14
    Total Debt to Equity (MRQ) 66.42 73.40 100.71 134.19
    Interest Coverage (TTM) -0.82 2.98 0.32 27.37

    Source:, SEC Filings.

    Technical Analysis


    CHUX is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

    The MACD for CHUX currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Feb06-2012 symbol Share, $ $ Mn 2011 2012 2011 2012
    Brinker International Inc. EAT 27.12 2.17B 14.50 12.50 0.78 0.76
    DineEquity Inc. DIN 50.49 910.79M 11.91 12.23 0.85 1.03
    Darden Restaurants Inc. DRI 48.34 6.21B 13.66 12.02 0.78 0.73
    Restaurants Median       21.10 n/a 0.99 n/a
    O’Charley’s Inc. CHUX 9.81 215.51M n/a n/a 0.26 0.25

    Source: Thomson Financial

    DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

    The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

    Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

    Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

    Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

    We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

    To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

    We encourage you to invest carefully and read investment information available at the websites of the SEC at and FINRA at

    Leave a Reply

    Your email address will not be published. Required fields are marked *