Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Restaurants & Bars industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Restaurants & Bars Stock News

Before choosing which top Restaurants & Bars stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

There is a neutral 12-month forecast for the restaurants sector. The acceptance of digital sales, the loosening of worldwide Covid-19 travel restrictions, and a relatively healthy labor environment will likely continue to have positive tailwind effects on demand for restaurants in the coming year. Given how much the macroeconomic background has deteriorated over the course of the year, the impacts of these tailwinds will most certainly fade over the course of this year's second half. Many eateries have significantly cut back on their hours of operation, closed down locations, and raised pricing. The Food Away from Home CPI Index, which jumped 7.7% YoY in June 2022, the highest 12-month growth since November 1981, provides evidence of the price increase. This trend may persist, but as consumers become more cost conscious, it will have a more detrimental effect on some parts of the restaurant subindustry than others. Through July 8, 2022, the S&P restaurants sub-industry index fell 18.6% vs. the 28.5% decline for the Consumer Discretionary sector and 18.2% decline for the S&P 1500. In 2021, the S&P restaurants sub-industry index grew 20.1% vs. the 24.4% gain in the broader Consumer Discretionary sector and 26.7% advance to the S&P 1500.

Why Focus on Undervalued Restaurants & Bars Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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4 Undervalued Restaurants & Bars Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Restaurants & Bars industry for Monday, January 02, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Restaurants & Bars industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Flanigan's Enterprises, Inc.’s Value Grade

Value Grade:

Flanigan's Enterprises, Inc. operates as a chain of full-service restaurants and package liquor stores. The Company operates through two segments: package stores and restaurants. The package stores segment consists of retail liquor sales and related items. The restaurants segment offers alcoholic beverages and full food service. The Company’s package stores operation owns and operates approximately nine package liquor stores in the South Florida area under the name Big Daddy’s Liquors or Big Daddy’s Wine & Liquors. Its restaurants operation owns and operates approximately five restaurants, which operates under its service mark Flanigan’s Seafood Bar and Grill. The Company operates approximately 27 units, consisting of restaurants, package liquor stores and combination restaurants/package liquor stores, and franchises an additional five units, consisting of two restaurant and three combination restaurants/package liquor stores.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Flanigan's Enterprises, Inc. has a Value Score of 94, which is considered to be undervalued.

When you look at Flanigan's Enterprises, Inc.’s price-to-sales ratio at 0.32 compared to the industry median at 0.73, this company has a lower price relative to revenue compared to its peers. This could make Flanigan's Enterprises, Inc.’s stock more attractive for value investors.

Flanigan's Enterprises, Inc.’s price-earnings ratio is 7.5 compared to the industry median at 12.8. This means it has a lower share price relative to earnings compared to its peers. This could make Flanigan's Enterprises, Inc. more attractive for value investors.

Now, let’s assess Flanigan's Enterprises, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 5.4, when compared to the industry median of 7.7, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Flanigan's Enterprises, Inc.’s shareholder yield is lower than its industry median ratio of 0.0%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Flanigan's Enterprises, Inc.’s price-to-book ratio is higher than its industry median ratio of 1.70. This could make Flanigan's Enterprises, Inc. less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Flanigan's Enterprises, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Flanigan's Enterprises, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 19.0. This could make Flanigan's Enterprises, Inc. more attractive because the lower P/FCF ratio indicates that Flanigan's Enterprises, Inc. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Bloomin' Brands Inc’s Value Grade

Value Grade:

Bloomin' Brands, Inc. is a casual dining restaurant company. The Company operates through two segments: U.S. and international. The Company through U.S. segment, owns and operates approximately 1,013 full-service restaurants and off-premises only kitchens, and franchised 157 full-service restaurants across 47 states. Outback Steakhouse is a casual steakhouse restaurant concept focused on steaks, bold flavors and Australian decor. The segment operates four restaurants, Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. The Outback Steakhouse menu offers seasoned and seared or wood-fire grilled steaks, chops, chicken, seafood, pasta, salads and seasonal specials. It through its international segment, owns and operates approximately 156 full-service restaurants and off-premises only kitchens and franchised 172 full-service restaurants and off-premises only kitchens across 17 countries and Guam.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Bloomin' Brands Inc has a Value Score of 62, which is considered to be undervalued.

Bloomin' Brands Inc’s price-earnings ratio is 21.4 compared to the industry median at 12.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Bloomin' Brands Inc less attractive for value investors.

Bloomin' Brands Inc’s price-to-book ratio is lower than its peers. This could make Bloomin' Brands Inc more attractive for value investors when compared to the industry median at 1.70.

You can read more about Bloomin' Brands Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Brinker International, Inc.’s Value Grade

Value Grade:

Brinker International, Inc. is a casual dining restaurant company. The Company owns, develops, operates and franchises the Chili’s Grill & Bar and Maggiano’s Little Italy restaurant brands, as well as certain virtual brands including It’s Just Wings and Maggiano’s Italian Classics. The Company has two operating segments: Chili’s and Maggiano’s. The Chili’s segment includes the Company-owned Chili’s restaurants, which are principally located in the United States, within the full-service casual dining segment of the industry. It also has Company-owned restaurants in Canada, and franchised locations in the United States and its territories. The Maggiano’s segment includes Company-owned Maggiano’s restaurants in the United States as well as the results from its domestic franchise business. The Company owns, operates or franchises approximately 1,600 restaurants in approximately 29 countries and two United States territories.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Brinker International, Inc. has a Value Score of 73, which is considered to be undervalued.

Brinker International, Inc.’s price-earnings ratio is 19.6 compared to the industry median at 12.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Brinker International, Inc. less attractive for value investors.

Brinker International, Inc.’s price-to-book ratio is lower than its peers. This could make Brinker International, Inc. more attractive for value investors when compared to the industry median at 1.70.

You can read more about Brinker International, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Fiesta Restaurant Group Inc’s Value Grade

Value Grade:

Fiesta Restaurant Group, Inc. owns, operates and franchise the fast-casual restaurant brand Pollo Tropical, through its subsidiaries Pollo Operations, Inc. The Company’s Pollo Tropical restaurants feature fire-grilled and crispy citrus marinated chicken and other freshly prepared menu items. It owns and operates approximately 138 Pollo Tropical restaurants, all of which are located in Florida. It franchises its Pollo Tropical restaurants primarily in international markets and had approximately 24 franchised Pollo Tropical restaurants outside the contiguous United States. In addition, it has five domestic non-traditional Pollo Tropical licensed locations on college campuses in Florida and locations at a hospital and a sports and entertainment stadium in Florida. Its Pollo Tropical restaurants feature fresh chicken marinated in a blend of tropical fruit juices and spices, crispy or fire-grilled, boneless and bone-in. Its Taco Cabana restaurants served Mexican-inspired food.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Fiesta Restaurant Group Inc has a Value Score of 63, which is considered to be undervalued.

Fiesta Restaurant Group Inc’s price-earnings ratio is 0.0 compared to the industry median at 12.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Fiesta Restaurant Group Inc more attractive for value investors.

Fiesta Restaurant Group Inc’s price-to-book ratio is lower than its peers. This could make Fiesta Restaurant Group Inc more attractive for value investors when compared to the industry median at 1.70.

You can read more about Fiesta Restaurant Group Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Restaurants & Bars Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Restaurants & Bars stocks as well as other industrys.

Choosing Which of the 4 Best Restaurants & Bars Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Flanigan's Enterprises, Inc. stock has a Value Grade of A.
• Bloomin' Brands Inc stock has a Value Grade of B.
• Brinker International, Inc. stock has a Value Grade of B.
• Fiesta Restaurant Group Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 undervalued stocks in the Restaurants & Bars industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Restaurants & Bars Stocks

Want to learn more about Restaurants & Bars stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 4 Undervalued Restaurants & Bars Stocks for Monday, January, 02
• 5 Undervalued Restaurants & Bars Stocks for Friday, December, 30
• 3 Undervalued Restaurants & Bars Stocks for Thursday, December, 29
• Is Cordia Corp (CORG) Stock a Good Investment?

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