Chuy's: Improving EBITDA Margins Should Lead To 50% Potential Upside

Summary

  • Chuy's Holdings has successfully improved both sales and EBITDA margins over the past couple of years.
  • These improvements have not been reflected in the share price, as Chuy's stock is roughly flat on the year and since its 2012 IPO.
  • The improvement in EBITDA margin means that Chuy's Holdings is undervalued compared to peers on an EV/EBITDA basis, so we anticipate a 50% potential upside in the share price from current levels.

Traditional Mexican food

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Thesis

Chuy's Holdings, Inc. (CHUY) is a solid restaurant business that is growing at robust levels and has managed to significantly improve its EBTIDA. It is undervalued compared to peers on an EV/EBITDA business; expect around 50% potential

This article was written by

Focus on value and special situations. Anything I write is simply my personal opinion and should not be taken as trading advice.

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