Company Overview
FAT Brands Inc. operates as a multi-brand restaurant franchising company that acquires, develops, markets, and manages a diverse portfolio of quick service, fast casual, casual dining, and polished casual dining restaurant concepts across the United States, Canada, and international markets. The company functions within the Consumer Cyclical sector, specifically the Restaurants industry, which classifies its performance as sensitive to discretionary consumer spending patterns and broader economic cycles. FAT Brands Inc. holds a market capitalization of $15.91M, generates $574.14M in annual revenue, and employs 2089 individuals to execute its business strategy. These valuation figures, particularly the market cap of $15.91M relative to its $574.14M in revenue, indicate a company with a relatively small market valuation compared to its top-line sales, suggesting a specific positioning or market perception within the broader restaurant landscape.
Financial Health
The company reported a revenue of $574.14M for the trailing twelve months, yet it recorded a net income of $-234,694,000 and an EBITDA of $-12,452,000. The substantial gap between the $574.14M in revenue and the $-234,694,000 in net income reveals a highly leveraged cost structure where operating expenses and interest obligations significantly erode profitability. Despite the negative net income, the entity generated $37.84M in free cash flow, which provides a degree of financial flexibility to fund operations or manage liquidity needs independent of accounting profits. Profitability metrics are under pressure, as evidenced by a gross margin of 24.7%, an operating margin of -11.4%, and a profit margin of -39.3%. The negative operating and profit margins indicate that the company is currently unable to cover its overhead costs and deliver earnings per share from its core business activities. On the balance sheet, the company holds $2.05M in cash against $1.57B in debt, creating a severe liquidity mismatch. The debt-to-equity ratio is listed as N/A, reflecting the capitalization structure where equity may be minimal or negative given the financial position. The current ratio stands at 0.03, which signals that the company's current assets are far below its current liabilities, indicating a critical lack of short-term liquidity to meet immediate obligations. Additionally, the return on equity is N/A and the return on assets is -2.4%, metrics that collectively reveal management is not generating value from the company's shareholder equity or total asset base, instead destroying value through significant losses.
Valuation Assessment
The trailing P/E ratio and forward P/E are both listed as N/A, which implies that traditional earnings-based valuation models cannot be applied due to the company's negative earnings history. The price-to-book ratio is -0.03, a figure that indicates the market values the company at a fraction of its book value, or potentially below it, suggesting a deep discount or a market view that the company's assets are impaired or insufficient to cover liabilities. Alternative valuation metrics such as the price-to-sales ratio of 0.03 and an EV/EBITDA of -130.06 further illustrate the distorted valuation environment where the market price is disconnected from sales and earnings multiples. The stock has traded between a 52-week high of $4.56 and a 52-week low of $0.32, with the current price situated near the bottom of this range given the low market cap context. The beta value of 1.22 indicates that the stock is expected to be 22% more volatile than the broader market, reflecting higher sensitivity to market swings. These valuation figures collectively suggest a high-risk profile where standard financial multiples fail to provide a clear valuation anchor due to the negative earnings and debt structure.
Growth & Income
Revenue growth year-over-year is -2.3%, while earnings growth is N/A due to the negative net income position. The lack of positive earnings growth combined with negative revenue growth implies a contraction in the core business operations or a decline in comparable store sales performance. Regarding income, the company offers a dividend yield of 25.1% with a payout ratio of 0.0%. A 25.1% dividend yield paired with a 0.0% payout ratio suggests that the dividend is not funded by current earnings but likely by cash reserves, debt issuance, or other non-earnings sources, making the sustainability of this yield questionable given the $-234,694,000 net income. Since the earnings growth is N/A and the net income is negative, the company does not reinvest earnings into growth in the traditional sense but rather faces challenges in generating retained earnings. The overall growth and income profile is characterized by negative revenue momentum, significant operational losses, and a dividend yield that lacks a foundation in sustainable earnings generation.