One of the cheapest stocks in our Acquirer’s Multiple, Small & Micro Cap – Stock Screener is Flanigan’s Enterprises, Inc. (NYSEMKT:BDL). With a market cap around $46 million, few investors have ever heard of this great nano-cap.
Flanigans Enterprises, Inc. (Flanigan’s) operates a chain of full-service restaurants and package liquor stores in South Florida. The company operates package liquor stores under the Big Daddys Liquors name, which offer private label liquors, beer, and wines; and restaurants under the Flanigans Seafood Bar and Grill service mark that provide alcoholic beverages and full food service. The company operates 26 units consisting of restaurants, package liquor stores, and combination restaurants/package liquor stores; owns 1 adult entertainment club; and franchises 5 units comprising 2 restaurants and 3 combination restaurants/package liquor stores. The company was founded in 1959 and is headquartered in Fort Lauderdale, Florida.
Flanigan’s flies under the radar of most institutions simply because of its size and its thinly traded shares. In fact, there are no analysts currently covering the company.
Flanigan’s is a great little nano-cap. The company has maintained a solid five year annual revenue growth rate of 7.8% while at the same time growing its book value per share by 11.5% and its operating income by 20%.
In addition to its successful company owned operations, Flanigan’s is able to generate significant revenues through its Limited Partnership Agreements (L/P agreements) as opposed to a traditional franchise royalty fee.
The company has also shown it’s very prudent when it comes to managing the real estate component of its business. While Flanigan’s operations are conducted primarily on leased property the company also owns approximately 70,000 square foot of real estate and several parcels of real property, while maintaining low levels of debt.
Flanigan’s has a very strong balance sheet, and solid free cash flows. The company is thinly traded, with daily volumes around 1000 per day, and protected from large institutions due to its size and its approximately 70% ownership from family insiders and two 5% stakeholders.
In terms of Flanigan’s valuation. The company is currently trading on a FCF/Price Yield of 16% (ttm), a FCF/EV Yield of 14% (ttm) and an Acquirer’s Multiple of 7.67, or 7.67 times Operating Earnings*. Add to this the company’s P/E of 15, its P/B of 1.56 and its P/S of 0.44 and Flanigan’s remains squarely in undervalued territory.
You can read our full stock analysis of Flanigan’s at ValueWalk here.