Biglari Holdings’ Chairman and CEO has been buying large quantities of stock since October. These transactions are notable considering the stock is trading at such a low valuation.
Insider Buying: Biglari Holdings
What’s more interesting in fact, Sardar Biglari has bought $21.8 million worth of stock since the beginning of October according to recent SEC filings. That’s roughly 2.5% of the company’s total market capitalization.
|Insider Trading||Relationship||Date||#Shares||Value ($)|
|Sardar Biglari||Chairman and CEO||Feb 09||1,187||$464,020|
|Sardar Biglari||Chairman and CEO||Feb 08||1,187||$469,787|
|Sardar Biglari||Chairman and CEO||Feb 07||1,173||$464,152|
|Sardar Biglari||Chairman and CEO||Feb 06||1,187||$467,272|
|Sardar Biglari||Chairman and CEO||Feb 05||905||$362,048|
|Sardar Biglari||Chairman and CEO||Feb 02||1,218||$496,531|
|Sardar Biglari||Chairman and CEO||Feb 01||803||$332,954|
Biglari Holdings’s Stock Price and Valuation
Biglari Holdings operates and franchises restaurants in the United States. The company owns, operates, and franchises restaurants under restaurant concepts, including Steak n Shake, an American brand serving premium burgers and milk shakes; and Western, which offers signature steak dishes and other American menu items.
The company’s shares last traded at $403.13 as of Friday, down -5.8% over the last year. While the stock has performed poorly as of late, could the recent insider transactions signal a promising road ahead for shareholders?
Analysts covering the stock typically compare the company to a peer group that includes Fiesta Restaurant Group (NasdaqGS: FRGI), Red Robin Gourmet Burgers (NasdaqGS: RRGB), DineEquity (NYSE: DIN) and Denny’s (NasdaqCM: DENN).
The consensus 12-month price target is the average of each individual sell-side Wall Street analyst. The consensus analyst upside equals the percentage difference between the price target and the current stock price. The calculation is simply:
Upside = (Analyst Price Target / Stock Price) - 1.
The company’s consensus analyst upside of 24.0% is above all of its selected comparable public companies: FRGI (7.2%), RRGB (19.7%), DIN (-3.1%) and DENN (-2.7%).
Furthermore, finbox.io applies pre-built valuation models to calculate a fair value for a given stock and uses consensus Wall Street estimates for the forecast when available. The company’s average fair value of $438.12 implies 8.7% upside and is calculated from 9 separate analyses as shown in the table above.
|Analysis||Model Fair Value||Upside (Downside)|
|10-yr DCF Revenue Exit||$487.45||20.9%|
|5-yr DCF Revenue Exit||$509.39||26.4%|
|Peer Revenue Multiples||$533.08||32.2%|
|10-yr DCF EBITDA Exit||$432.97||7.4%|
|5-yr DCF EBITDA Exit||$436.89||8.4%|
|Peer EBITDA Multiples||$348.57||-13.5%|
|10-yr DCF Growth Exit||$403.24||0.0%|
|5-yr DCF Growth Exit||$397.33||-1.4%|
|Earnings Power Value||$394.14||-2.2%|
Insider activity on its own is not necessarily a buy or sell signal, it may offer insight into how ownership and management feel about a company’s future prospects. Keeping an eye on the activities of insiders and institutions can help investors make more informed investment decisions.
I recommend you continue to research Biglari Holdings to get a more comprehensive view of the company by looking at:
Risk Metrics: what is Biglari Holdings’ CapEx coverage? This is the amount a company outlays for capital assets for each dollar it generates from those investments. View the company’s CapEx coverage here.
Efficiency Metrics: return on equity is used to measure the return that a firm generates on the book value of common equity. View Biglari Holdings’ return on equity here.
Forecast: what is Biglari Holdings’ projected EBITDA margin? Is the company expected to improve its profitability going forward? Analyze the company’s projected EBITDA margin here.
Author: Matt Hogan
Expertise: Valuation, financial statement analysis
Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.
Matt can be reached at firstname.lastname@example.org.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.