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  • Why Flanigan's Enterprises, BDL Is Overvalued And Will Leave A Scar On Traders 0 comments
    May 22, 2013 11:36 AM | about stocks: BDL

    There quite possibly could be a handful of ego busted, wound licking traders who will be kicking themselves in the rear over Memorial Day weekend for getting caught with their hands in the cookie jar on BDL,Flanigan's Enterprises Inc. Make no mistake this is a certified pump with an unjustifiable price tag that soon will be realigned to reflect a fair market price rather than the current inflated pump price. Which will ultimately ruin what was an otherwise great stock

    First lets discuss the valuation of Flanigan's Enterprises Inc. the current eps has only slightly increased from the 0.76 a share from 2012 . This was when the stock was listed at 7.10 per share. If you match Flanigans to an equal peer such as DIN , Dine Equity, which has a PE of 11.99 the true value EPS of $.076 X 11.99, that equals a share price of 9.12 rather than the 12.75 Tuesday closing price.That is 3.63 more than current EPS. Even if the math is grossly off and you were to DOUBLE the average PE ration the stock price would be valued at no higher than $14 which was hit today in intra day trading.

    Second lets look at the technical perspective. In the last 5 trading day the price of BDL has increased +68% and is listed as the top overbought stock showing the highest technical overbought reading on FINVIZ. View it like gas prices. If they raise too much too fast a price will be reached where it becomes unattractive to the herd and they will no longer accept the increase. Thats when the "screw off" " rebellion" DNA genes kick in and investors will walk away.

    The question here is growth. The comparisons of PE ratios most investors a gauging Flannagins too are those of national chains. Flanigan's Enterprises is geographically limited to only a small section of South Florida as opposed to peers in its industry that have a nationwide presence. This in my opinion will limit the long term upside potential. As a once long term buyer of this company I have to walk away at this point as the scrupulous stock pumpers have their greedy filthy hands all over this stock.

    Bubble believers and pumpers make their case with a plethora of charts and analogies, all illustrating the same point that this stock has a potential to reach prices of +10 to 15 higher than fair market value within the next few days. I do belive unlike many pump and dump stocks that BDL is a legitimate company and perhaps a $20 price target is achievable but not under this format. The sad part about this is these stock pumpers and manipulators are going to ruin a great stock that I fear may soon ;eave a sour taste in investors mouths

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: BDL
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