Caribou Coffee Company, Inc. (CBOU)

... another coffee bubble that is due to burst.

tiny titan

stimulant play - not stimulus play... damn i'm funny... all the same watch this pop

CBOU had a falling out since thier IPO.

Since then management has swapped out and trimmed all the fat. Now they are making steady profits and have been franchising.

Looking good for CBOU.

a good coffee chain

no debt. good cash position and cash flow.
consumer staple (coffee)

They are shutting these down everywhere except Wisconson. I travel alot and only see Starbucks. $4 dollar coffee isn't a big concern anymore.

coffee is good, but thinking it can save the USA economy is bad.

Introduce yourself to the new Starbucks! I wish I would've started buying this stock when I started drinking their coffee in college!

Guessing this one is a bit overbought...

I like Caribou...but this rally is totally BANANAS! Negative EPS...and they can't compete with even a weakened SBUX...and now MCD is stealing SBUX market share.

I think this stock is destined for big short-selling around its 52-week high (~$7.00). Maybe interesting for a covered put.

I owned and sold it sometime back....Whhhhaaaaa!

Folks like good quality at a fair price.

There's a lot to dislike in this stock, but I'd like to make a few points and see your response. There are 3 fundamentals for me with this stock:
1. Like you mention, cash flow. If they stopped building stores today and capex dropped to a couple Mil a year, plus trim some OpEx, they could throw off close to $20 Mil per year. That means we've got a 6X cash flow company today with an option on a better company in the future.
2. Industry - The coffeehouse industry continues to grow well ahead of the broader economy, and SBUX today has roughly 9000 of the 35,000+ coffee shops in the US, with CBOU #2 with over 500. This represents a tremendous opportunity for someone to step up and be a real competitor to SBUX.
3. Expansion: A) They're beginning to franchise more stores. In the restaurant industry, franchised stores typically perform better than company owned stores, and because the parent company collects royalties, it's good from a margin point of view. B) A typical mature CBOU store does about $700,000 in annual sales, versus $1MM for SBUX. I'm not exactly sure what type of operating leverage they have internally, but I know it's decent - they just bought a roaster that is running well short of capacity. 2 years of 5-7% comps (much easier said than done) would get them to around 800,000 per store, assuming 500 mature stores and 12% EBITDA margins (reasonable compared to SBUX), they could trade for 9X EBITDA (belong historical range) and the company would be worth over $400MM. To be sure, it's a bull scenario, and the toughest part is clearly achieving those comps. With that, everything else would fall into place.
From today's price, a number of neutral scenarios could bring the stock price to around 8. 18MM EBITDA at 9X by YE08 implies a $8.40 stock price - 25% upside.

Problems:
I have the same questions about the management team. Why aren't they getting it done? It's hardly a complicated business. Meanwhile, they're launching 10 new CBOU branded products a quarter, into a division which will have to grow 50% PA for the next 4 years to dent the bottom line.
Sentiment: The company is 60% owned by Arcapita Bank, based in Bahrain. In 2002, a nasty rumor was floated that this bank, and by extension, CBOU, were funneling money to terrorists. This was proven patently false, but unfortunately it left an impression in the minds of many consumers. Also because of this ownership the company must operate under Islamic law. While this is relatively meaningless from a business point of view (basically means no pork or alochol in the stores), it may also leave a mark in some consumers minds, and you can't deny latent Islamophobia in this country.

This is a company that just can't seem to find the right business model. The losses for the latest quarter were .20 per share versus a loss of .12 a year ago. They opened 36 new stores and grew revenue by 11%, but increased losses. Hmmmm. Worst of all, same store sales were a mere 1%. That tells me that customers are not satisified with their Caribou coffee experience and do not want to go back. Not good.

Good potential upside.

They have great product, as good as SBUX, but don't have a leader like SBUX does in Howard Schultz. My bet is that they will get their act together and find someone who can bring some of that "magic dust" to the share price just like Howard.

The Coffee House Industry stock has been in decline for several months now.I think it will be several more before this outperforms the S&P 500.

Nothing has changed with this company over the past year. They're still opening new restaurants which keep losing money. This is some of the dumbest expansion I've seen. They have a load of underperforming restaurants and negative income, so what do they do? Open more restaurants. Yeah, that will get you to a lot of great places.

SSS are decreasing, as usual. As of the latest quarter, the company is losing more than twice as much money (-$0.17 per share) from the same quarter in the previous year (-$0.08 per share). Man, those new restaurants sure are getting the job done. CBOU's income has decreased every single fiscal year for at least five years (as far back as Google will show). Meanwhile the company has been opening new restaurants at a pretty fast clip. Like I said, it's the dumbest expansion you can do. New restaurants aren't going to get the company anywhere except closer to oblivion.

The balance sheet is decent, lucky enough for investors the company doesn't have any debt. This will only keep them from disappearing realy quickly, with this management team things will be a lot worse in a few years.

What's real surprising to me is that cash flow from operating activities is actually positive. The problem with this is that management is throwing the cash into new restaurants, which only make the company lose more money. They've got some decent cash flow, but terrible cash management, in my opinion. That will take a company down.

If management doesn't wake up and realize how boneheaded they have been, this stock will suffer. If management realizes they've been doing stuff wrong and decide to change their strategy, in the long run it'll be for the better of shareholders, only it will probably cost a lot of money and the losses will continue for some time. Either way, I think this stock will underperform over the next few years. Management doesn't have any strategy that I see as helping create value over the long run, they think opening lots of new restaurants will help their problems. Sooner or later, to stay in business, they'll need to either shut down underperforming restaurants or do some more work on them. That will cost a lot of money, especially with the rate they're throwing money away and expanding.