Fogo de Chao Accepts Buyout Offer; Stock Moves Substantially Higher

    Author Siraj SarwarPosted on Categories Consumer, RestaurantsTags , , , , , , , , , , , , , , , , ,
    Fogo de Chao

    Fogo de Chao (NASDAQ:FOGO) has impressed investors and analysts with its strong operational and expansion strategies. The company has recently announced that it expects fourth-quarter revenue to stand in the range of $88.8M, higher from the consensus estimate of $84M.

    Its U.S. owned restaurants generated comparable sales growth of 2.4%, while total company-owned restaurant sales grew 0.8% over the past year quarter. The management also expects considerable improvement in earnings and cash generation potential.

    Fogo de Chao’s strategy of to expanding into different dayparts, all-day value offerings along with price optionality were the key growth drivers for growth in the fourth quarter.

    Rhône Capital acquired Fogo de Chão

    Fogo de Chao today announced that they agree to be acquired by Rhône Capital for $560 million and the shareholders are likely to get $15.75 per share. Rhône Capital expects to complete the acquisition during the second quarter of 2018.

    “After a thorough evaluation of the options available, the Board of Directors is confident that this transaction will provide Fogo a significant opportunity to realize the highest value for our stockholders while providing the best path forward for the Fogo de Chão brand, employees, and loyal customers,” says CEO Larry Johnson.

    Source Image: finviz.com

    Its share price soared more than 25% after the announcement of the acquisition. Fogo de Chao stock has the 52-week trading range of $10 to $17. Its stock currently trades around $15.60 –

    with the market capitalization of $354 million.

    >>Fossil Stock Could Hit $25

    Credit Suisse Has Strong Confidence in Fogo De Chao

    Previously, Credit Suisse has increased the price target for FOGO shares to $14 from the earlier target of $11.50. The firm improved its target price based on initiatives such as new bar menus, daypart expansion and a more favorable holiday calendar for the improved sales.

    The firm said, “We came away from the meeting more optimistic that FOGO can deliver EBITDA and EPS growth in 2018, with the latter helped by tax reform (mgmt. estimates ~21-25% tax rate post-reform).”

    Featured Image: urbanologie.com

    Author Siraj Sarwar
    About the author: Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.