CEC Entertainment, Inc. (CEC)

kristm (99.74) Submitted: 8/6/2008 12:35:45 AM : Start Price: $36.37 CEC Score: +8.74

I never have liked this company, it encourages kids to beg their parents for quarters and eat unhealthy crap - plus the characters and games are pretty lame. But beyond that..

--CEC is better known for its games than its food, but most companies in the arcade/gaming business are going away because families prefer to play games over and over for free on their home game console or computer. If they had room for something more active like, say, a go-cart track - but they don't.
--The food sucks, CiCi's pizza buffet has better cardboard pizza than these people do and it costs a lot less. They might be better than Little Caesars, but if so not much.
--Food prices are rising all over, every restaurant chain is getting squeezed hard by increasing food costs and this one won't fully escape that either.
--The economy is tight, gas prices are high - luxuries like playing games during dinner with the kids aren't going to be as affordable as they were.

My only counter thought to this is the whole "staycation" argument - people will go to CEC instead of Disney or Six Flags for vacation this year. That's pretty lame, but it might happen. However, those people who normally go to CEC instead of Disney or Six Flags during good times will be staying home during bad times, so that won't really help things very much.

edwinaanne (93.73) Submitted: 3/26/2008 9:08:45 PM : Start Price: $29.76 CEC Score: +12.94

RESTAURANTS / CONSUMER SERVICES /ENTERTAINMENT

30 YEAR OLD COMPANY FRANCHISEES OPERATE 534 RESTUARANTS. OWNER OF CHUCK E CHEESE’S RESTAURANTS. CHUCK E CHEES’S OFFERS FAMILIES WITH KIDS A ONE-OF-A-KIND TOTAL ENTERTAINMENT EXPERIENCE THAT INCLUDES THE COOLEST GAMES AND RIDES, CHANCES TO WIN TICKETS FOR FUN PRIZES, ENTERTAINMENT AND GREAT FOOD FOR THE FAMILY. TODAY, MORE THAN EVER, KIDS NEED A SAFE, WHOLESOME ENVIRONMENT IN WHICH THEY CAN LAUGH, PLAY AND SIMPLY ENJOY BEING A KID.

52 WK RANGE: $19.81-43.83

MARKET CAP: $658M

P/E 10.71

1 YEAR TARGET: $37.75

DIV: NO DIVIDEND

BETA: 1.27

NET PROFIT MARGIN: 7.12%

ROE: 16.34%

% HELD BY INSTITUTIONS: 96.80%

MORNINGSTAR: GROWTH C PROFITABILITY C FINANCIAL HEALTH B-

REVENUE: 4 QTR 2007 AND 4 QTR 2006 REMAINED CONSTANT AT $175.1M, GROWTH: FROM THE NEW STORE DEVELOPMENT WAS OFFSET BY A DECLINE IN COMPARABLE STORE SALES OF 2.7%.

INCOME: A NET LOSS OF $0.6M IN THE 4 QTR 2007 COMPARED TO NET INCOME OF $12.1M IN THE SAME PERIOD OF 2006.

EPS: 1.76 4 QTR 2007 DECREASED TO ($0.02) PER SHARE FROM $0.36 PER SHARE IN THE 4 QTR 2006. INCLUDED IN 2007 AND 2006 4 QTR RESULTS WERE ASSET IMPAIRMENT COSTS TOTALING $8.4M AND $0.4M, RESPECTIVELY. ADDITIONALLY, THE 4 QTR 2007 WAS NEGATIVELY IMPACTED BY CERTAIN TAX RELATED ADJUSTMENTS TOTALING APPROXIMATELY $2.0M.

BUYBACK: REPURCHASED $248M OF COMPANY STOCK 7.9M SHARES. FREE CASH FLOW WILL BE USED TO REPURCHASE SHARES

SALES: SAME-STORE SALE INCREASING 2.5% 08

OUTLOOK: SAME-STORE SALES GROWTH FLAT TO 1% FOR 08 CONSERVATIVE GIVEN CHALLENGING CONSUMER ENVIRONMENT, INCREASE COST OF CHEESE, LABOR EXPENSES

fcharles81 (78.70) Submitted: 2/21/2008 5:04:50 PM : Start Price: $26.00 CEC Score: -27.31

I like to take my kids to the place just to get out sometimes, but the food isn't all that great. Unless they can up with something new in their resturants, it gets old. I won't say they'll go bankrupt, but they won't Outperform.

NetscribeRstrnts (< 20) Submitted: 12/28/2006 5:59:43 AM : Start Price: $40.86 CEC Score: -10.88

CEC Entertainment develops, operates, and franchises family restaurant/entertainment centers under the name "Chuck E. Cheese's." The company operates 477 owned-units and 45 franchised units located in 48 U.S. states and 4 countries. The centers offer a fun, family-oriented atmosphere featuring musical and comic entertainment by life-size computer-controlled robotic characters, family oriented arcade games, a toddler play area, and token-operated rides and arcade-style activities. Menu offerings include pizza, sandwiches, a salad bar, appetizers and desserts.

The management's plan for slower unit growth, increased ongoing remodels and more focused operations currently appears to be working as the company reported positive growth in recent quarter. The company is reducing its new store openings, mainly to focus on higher sales and return on investment from its existing stores. Beginning in 2007, the company plans to open approximately 8 to 12 new stores per year in densely populated areas and in its best performing geographic markets. The company is also paying attention on increasing the value to its guests with improved offers and increased distribution of coupons, cross-promotions and direct e-marketing.

The above strategy will help the company to reduce its capital expenditure which will lead to increased free cash flows, which will help them reward the shareholders by share repurchases. The company’s strong business model with EBITDA margins averaging 25% plus over the past five years and an increased focus on remodels should drive same store sales improvement over the next few quarters. Looking at the positive trends shown by the company in the recent quarters it is expected that it will outperform in the future.

Banjolicious (< 20) Submitted: 10/27/2006 11:12:07 AM : Start Price: $34.93 CEC Score: +1.18

No focus, jut excuses

Fuskie (64.71) Submitted: 10/9/2006 5:32:30 PM : Start Price: $32.84 CEC Score: +2.23

CEC caters to kids, which means that their customer base can be finicky. But as long as they remain sensitive to what makes youngsters happy, there will always be those in the target age group who want t heir birthday parties there. Maintaining their appeal is critical; finding ways to hang onto their aging clientelle longer will be a big bonus.

bmoclex (71.87) Submitted: 10/8/2006 3:23:37 PM : Start Price: $32.55 CEC Score: +2.87

Concentrating on existig stores before opening up new ones.