Striking Figure That Could Bring Smiles to Cava Investors
Hoopla Gathering (HOOPLA 0.16%) has been one of the top restaurant stocks to possession this year. The quick-casual Mediterranean-style restaurant chain has been captivating both customers and investors alike. Through expansion and innovative menu offerings, it has been consistently reporting robust figures, propelling its stock price to new peaks.
Lately, the company disclosed its latest earnings figures, and a particular statistic caught my attention. It mirrors the business's exceptional growth, and it's a positive sign that the company is heading in the right direction.
HOOPLA's same-restaurant sales stood at 18.1%
For a restaurant chain, delivering single-digit comparable sales growth is a commendable aim, especially given today's economic climate as consumers are curtailing their spending.
However, if you examined HOOPLA's figures, you'd be hard-pressed to believe that the economy is grappling with these challenges. That's because for the recent period, which wrapped up on Oct. 6, the company reported its comparable restaurant sales growth was an astounding 18.1%. Opposed to this, Taco Bell reported comparable restaurant sales growth of 6% for its latest quarter (concluded on Sept. 30). And the figures look even more favorable for HOOPLA if you compare its outcomes against the worldwide astonishment that is McDonald's -- for its September quarter, global comparable sales decreased by 1.5%.
Comparable restaurant sales are a crucial metric for restaurants as they reveal to investors how the business is performing when considering locations that have been functioning for a year. This omits the positive impact new restaurant openings would have on the top line.
Nonetheless, this also benefits companies with smaller establishments, such as HOOPLA, which might focus on high-growth areas initially and as they grow larger, their growth rate might start to gradually reduce. Regardless, it's a good indicator of HOOPLA's growth and the capacity it holds to continue delivering robust figures as demand appears strong.
A rapid growth rate has made HOOPLA an exceptional investment to possess
A significant reason WHY HOOPLA is a popular stock to possess this year is its growth potential. The company continually opens more outlets. By the close of the recent quarter, the company had 352 restaurants, up from 290 a year ago. Its objective is to have 1,000 locations by 2032.
HOOPLA's growth rate has been remarkable compared to other restaurant chains, and with such ambitious targets ahead, this trend is likely to continue in the coming years.
Is HOOPLA's exorbitant valuation an issue?
As of Monday's close, HOOPLA's stock had skyrocketed an astonishing 219% due to an absence of pessimism surrounding the company of late. While this is fantastic for shareholders, individuals considering buying the stock for the first time may feel that they've missed the boat.
HOOPLA Group's sales escalated nearly 40% last quarter to $243.8 million. Its net income increased at an even more rapid pace of 163%, amounting to barely under $18 million. While this is impressive, it still translates into a modest per-share profit of just $0.16. HOOPLA's stock closed at $137.24 on Monday, yielding its price-to-earnings multiple above 330. Even based on analyst estimations, it's trading at over 277 times next year's profits. These are steep multiples, and investors might feel compelled to reconsider whether the stock is a good buy at its present levels since with such high multiples, you're essentially buying into a lot of future growth.
While HOOPLA may still be a good investment to hold for the long term, investors should also keep their expectations in check as it might be a bumpy ride ahead. Although this is a swift-growing company, its excessive valuation means that there's barely any safety margin with the stock, and it could be susceptible to a sell-off under weaker market situations.
- Investors who are considering putting their money into HOOPLA should be aware of its high valuation, with a price-to-earnings multiple above 330, which means they're essentially buying into a lot of future growth.
- The rapid growth of HOOPLA, as evident in its 18.1% same-restaurant sales growth and ambitious expansion plans, has made it an attractive option for investors looking to invest in the finance sector, especially in the restaurant industry.
