GEN Restaurant Group, Inc. (NASDAQ: GENK)

Sector: Consumer Cyclical Industry: Restaurants CIK: 0001891856
Market Cap 12.14 Mn
P/B 0.87
P/E -9.12
P/S 0.06
ROIC (Qtr) -3.27
Div Yield % 1.27
Rev 1y % (Qtr) 2.67
Total Debt (Qtr) 175.54 Mn
Debt/Equity (Qtr) 12.61

About

GEN Restaurant Group, Inc., also known as GENK, is a significant player in the Asian casual dining industry within the United States. The company, established in 2011 by two Korean immigrants, Jae Chang and David Kim, has expanded to operate 37 company-owned restaurants across several states, including California, Arizona, Hawaii, Nevada, Texas, New York, and Florida. GEN Restaurant Group's primary business activities involve managing Asian casual dining restaurants. These establishments offer a distinctive and interactive culinary experience,...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 11.15M provides exceptional 13.04x coverage of interest expenses 855000, showing strong debt service capability.
  • Free cash flow of (18.52M) provides excellent 117.95x coverage of dividends (157000), indicating sustainable shareholder returns.
  • Tangible assets of 236.04M provide robust 15.20x coverage of other current liabilities 15.53M, indicating strong asset backing.
  • Operating cash flow of 11.15M fully covers other non-current liabilities 1.08M by 10.35x, showing strong long-term stability.
  • Operating cash flow of 11.15M provides strong 12.61x coverage of inventory 884000, indicating efficient inventory management.

Bear case

  • Operating cash flow of 11.15M barely covers its investment activities of (26.67M), with a coverage ratio of -0.42, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 11.15M provides thin coverage of dividend payments of (157000) with a -71.01 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • The company's operating cash flow of 11.15M shows concerning coverage of stock compensation expenses of 2.94M, with a 3.80 ratio indicating potential earnings quality issues.
  • Free cash flow of (18.52M) provides weak coverage of capital expenditures of 29.67M, with a -0.62 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of 11.15M provides minimal -29.34x coverage of tax expenses of (380000), suggesting potential tax planning inefficiencies or unsustainable tax positions.

Peer comparison

Companies in the Restaurants
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MCD Mcdonalds Corp 222.05 Bn 26.39 8.45 55.82 Bn
2 SBUX Starbucks Corp 95.51 Bn 51.45 2.57 26.61 Bn
3 CMG Chipotle Mexican Grill Inc 50.94 Bn 33.15 4.32 4.98 Bn
4 YUM Yum Brands Inc 43.17 Bn 29.83 5.36 11.55 Bn
5 QSR Restaurant Brands International Inc. 22.43 Bn 24.33 2.42 15.64 Bn
6 DRI Darden Restaurants Inc 21.91 Bn 19.91 1.77 6.16 Bn
7 YUMC Yum China Holdings, Inc. 18.12 Bn 20.05 1.57 1.84 Bn
8 DPZ Dominos Pizza Inc 14.57 Bn 24.72 3.01 5.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.72 2.05
EV to Cash from Ops. EV/CFO 15.84 16.57
EV to Debt EV to Debt 1.01 4.75
EV to EBIT EV/EBIT -206.10 3.45
EV to EBITDA EV/EBITDA 30.86 9.76
EV to Free Cash Flow [EV/FCF] EV/FCF -9.54 29.06
EV to Market Cap EV to Market Cap 14.55 6.55
EV to Revenue EV/Rev 0.81 2.40
Price to Book Value [P/B] P/B 0.87 -1.40
Price to Earnings [P/E] P/E -9.12 13.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -8.48 -9.56
Dividend Payout Ratio % Div Payout % (Qtr) -11.50 18.72
Dividend per Basic Share Div per Share (Qtr) 0.03 0.84
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -0.85 30.41
Interest Coverage Int. cover (Qtr) -1.00 -86.85
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -21.70 -24.56
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -78.27 35.50
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.72
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -269.22 -564.81
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -58.60 25.78
EBIT Growth (1y) % EBIT 1y % (Qtr) -305.02 -507.68
EBT Growth (1y) % EBT 1y % (Qtr) -308.78 -41.98
EPS Growth (1y) % EPS 1y % (Qtr) -244.44 -126.51
FCF Growth (1y) % FCF 1y % (Qtr) -257.49 5,724.78
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -23.34 23.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.89 0.99
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 0.12 0.78
Current Ratio Curr Ratio (Qtr) 0.33 1.47
Debt to Equity Ratio Debt/Equity (Qtr) 12.61 0.05
Interest Cover Ratio Int Coverage (Qtr) -1.00 -86.85
Times Interest Earned Times Interest Earned (Qtr) -1.00 -86.85
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 6.40 7.71
EBIT Margin % EBIT Margin % (Qtr) -0.39 -2.27
EBT Margin % EBT Margin % (Qtr) -0.79 -1.97
Gross Margin % Gross Margin % (Qtr) 7.40 34.04
Net Profit Margin % Net Margin % (Qtr) -0.60 -3.69