BWL-A BOWL AMERICA INCORPORATED
Sector financial performance:
This company, which primarily operates bowling centers earning revenue from charge for use of bowling lance and facilities (71% of total revenue) and from food& beverage (29%), has been grouped into bowling centers sector in sport centers industry.
It seems that the demand for bowling center has fluctuated but generally been increasing in the past three years as indicated by the average increase in blowing related revenue of companies in this sector in the past three years except for 2017. Fluctuated revenue in food& beverage may be an accurate reflection of visitors of those centers, which may have been influenced largely by promotions. However, increase in both bowling and food& beverage in 2018 may imply a potentially stronger demand coming in this sector
The increase in demand and thus the upward pressure in price help largely improved companies’ gross margin. The typical gross margin (including operating costs and depreciation) is about 19% in 2018, SG&A as percentage of sales is about 3%, and operating margin is about 16% in 2018.
The typical enterprise price/EBI (adjusted with tax field) ratio is 32.
It seems that the demand for bowling related service of this company has fluctuated and been increasing gradually in the past three years as indicated by the annual growth of 0-3% in revenue during the same period. Another source of revenue for those centers, food and beverage, fluctuated as changes in use of bowling lane and facilities but in smaller range.
The first nine months of fiscal 2018 compared with the same period of 2017 (ended April 1, 2018)
Net revenue increased 2.5% due to increase of 3% in bowling related revenue and increase of 1.2% in food and beverage revenue.
Fiscal 2017 compared with fiscal 2016
Net revenue decreased 0.7% due to decrease of 2.4% in food and beverage revenue offset by increase of 0.1% in bowling related revenue.
Fiscal 2016 compared with fiscal 2015
Net revenue increased 4.2% due to increase of 3.5% in bowling related revenue and increase of 5.9% in food and beverage revenue.
Its gross margin (including direct operating costs and depreciation) has been continuously improved in the past several years from about 13% to about 19%. With a slightly fluctuated SG&A as percentage of sales (3-4%), we have seen much improved operating margin during this period (about 16% in 2018).
This company is having an enterprise price/EBI ratio of 32 under the acquired price. We think that its stock was Undervalued. A ratio of 41 may be more appropriate.
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