DAVE

DAVE

Famous Dave’s (DAVE) is a restaurant chain based in Minnetonka, Minnesota. The company owns 37 restaurants and franchises 141 more. This is your typical barbeque, grilled meat restaurant chain.

As you can see by the list below DAVE has had relatively strong earnings compared to 2016.

FY12 $0.55

FY13 $0.59

FY14 $0.98

FY15 $0.64

FY16 $0.07

An average of years 2012 through 2016 is $0.69 per annum.

When looking at the chart notice the higher low, double bottom and the breakout through first resistance at $5.25. All these are turnaround indicators.

On October 12, 2016 Michael Lister was appointed CEO.

Famous Dave’s appoints Michael Lister as CEO succeeding Adam Wright   (5.28 -0.03)

10/12/2016, 6:57:53 PM ET

  • Co announced that Adam J. Wright, Chief Executive Officer, is no longer an employee of the Company, and has resigned from the Board of Directors. Michael W. Lister has been appointed to replace Adam Wright as Chief Executive Officer and has also been appointed Chief Operating Officer. Lister is an accomplished restaurant industry executive with more than 35 years of experience, including a 19-year history with Famous Dave’s of America. He has been a franchisee of the Company since 2001, operating among the most successful franchise groups in the Company.

Courtesy of Briefing.com

He will be the fourth CEO since 2012. As a 35 year veteran of the restaurant industry and one of DAVE’s most successful franchisees, Mr. Lister looks like he will be able to refocus and energize the management team of Famous Dave’s.

Lister and his team have been honored with multiple community and franchise awards, which includes Famous Dave’s Franchise of the Year for excellence in operations, financial performance and outstanding Guest service.  Lister also won the 2012 Tennessee Small Business Person of the Year Award by the U.S. Small Business Administration.

The negatives on this trade are book value of $3.00 to $3.32, depending on who you get your information from and 2016 earnings of only seven cents per share. With no turnaround in revenue or earnings per share (EPS) DAVE could continue lower to the $3.00 area.

The positives are a new CEO with a proven track record, a proven concept, a turnaround in consumer confidence with our new president which will generate consumer spending, low debt, earnings estimates have increased to 30 cents per share for FY17, a 500 percent increase from a few months ago. Let’s not forget that increased EPS will raise P/E to 25/30 area if not more.

If, and that’s a big IF, Michael Lister can turn DAVE around and return the company to 65/70 cents per share sales Dave should be able to return to the $20/22 area within two years.

Ten days ago I bought a few hundred shares at $4.60. Today I bought a larger position at $4.75. On 12/06/2016 Dave popped up to $5.35 which is now first resistance. When it clears that I will add to this just above there or at $3.00, whichever comes first.

Next earnings are Feb. 23, 2017. This will tell the tale. For those who only trade a sure thing, the best entry would be after the earnings call. The only problem there is there could be a large gap up on a good earnings.

Dave C

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