Good Times Restaurants: The Bullish Thesis Remains Compelling

Summary

• Good Times Restaurants recently reported Q3 FY22 results, in line with expectations. Profitability remains challenging due to commodity and labor inflation.
• Despite no long-term debt and healthy growth, the firm currently trades as a distressed asset.
• I believe this gives value investors a good opportunity to buy an undervalued business with significant upside.
• I maintain my buy rating on GTIM, although I have lowered my fair value estimate from $8 to $7 per share to account for deteriorating economic conditions.
• Position sizing is critical in this market, and investors must be prepared to tolerate and capitalize on short-term volatility.

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Investment Thesis

Good Times Restaurants (NASDAQ:GTIM) is one of the few stocks with a buy rating at Unlocking Alpha in 2022 (you can read my previous article here). The reason is simple: it's trading significantly lower than its intrinsic

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in GTIM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.