Securities and Exchange Commission attorneys wrote, “Past performance is no guarantee of future results.” Shakespeare penned “What is past is Prologue” in The Tempest. In other words, what’s happened before is likely to happen again.
Well, let’s put both to the test this week with our insider buy with a purpose. We’ll look back in a year and see which is right.
Bloomin’ Brands, Inc. (BLMN) Chief Operating Officer (COO) Gregg Scarlett has a stellar track record trading the restaurants chain. Bloomin’ Brands owns and operates fine dining restaurants in the United States and internationally. Its restaurant portfolio includes the Outback Steakhouse, Carrabba’s Italian, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.
COO Scarlett started his BLMN trading in May 2016 when he sold 8,500 shares at $18.89 for $160,565. His selling accelerated when the consumer cyclical stock made into the low-mid $20. From April 2017 to March 2018, Scarlett sold three more times, cutting loose more than 190,000 shares for a touch more than $4.5 million. (1)
Scarlett returned to the market after the COVID crash, this time as a buyer or 25,000 shares at $10.05 for a little more than a quarter-million dollars. Just nine days short of a year to the day, the Chief Operating Officer sold 135,929 shares at $30.73 for nearly $4.2 million. Scarlett pocketed more than a half-million-dollar profit on his 10,000 share purchases, making north of 200%.
Like a horror movie villain, he’s back… COO Scarlett purchased another 10,000 on November 22, 2021, at $19.22 per share for a total outlay of $192,180.
Now it’s legalese versus literature.
Based on Chief Operating Officer Gregg Scarlett’s history, Shakespeare is more likely to stand the test of time. The COO’s track record is blemish free to date. However, if Wall Street analysts are correct, there is a chance the SEC lawyers pens are mightier.
Analysts forecast consensus earing per share (EPS) of $2.45 in 2022, that’s about 20 cents lower than this year’s expectations of $2.64. (2) Projections could go lower as the consensus is sliding. A month ago, the street forecasted 2022 profits on $2.76 per share. Falling profits and lower expectations usually aren’t a prescription for a higher stock price.
For the past five-years, Bloomin’ Brands has traded at a maximum price to earnings ratio (P/E) of 18.98, a low of 7.76, while averaging 14. Let’s take 2022’s consensus EPS forecast to create a potential range for BLMN shares in the next 12-18 months.
- Five-year MAX P/E Price Target: $46.51
- Five-year LOW P/E Price Target: $19.01
- Five-year AVERAGE P/E Price Target: $34.30.
As of this keystroke, BLMN trades at $19.07 (closing price, November 26, 2021).
Outlook: Based on potential price targets using Wall Street’s 2022 consensus EPS forecasts and Bloomin’ Brands, Inc. (BLMN) five year, high, low and average P/E ratios, it appears the restaurants chain could have limited downside and attractive upside potential in the next 12-18 months. If that’s the correct call, then COO Scarlett and Shakespeare are likely to winners to be.
With a beta of 2.02, Bloomin’ Brands is only appropriate for investors who can tolerate above average volatility. (3)
1 – https://www.secform4.com/insider-trading/1636664.htm
2 – https://finance.yahoo.com/quote/BLMN/analysis?p=BLMN
3 – https://finance.yahoo.com/quote/BLMN/key-statistics?p=BLMN