Carrols Restaurant: An Okay Business Deserves An Okay Valuation


Being a franchisee is not a great business as you are at the mercy of the franchisor.
The market is focusing on short-term events such as capturing the synergies of the latest acquisition and the performance of Impossible Burgers, that won't move the needle in the long term.
Organic stores are worth 1.4x the invested capital. However, more than half of TAST stores were acquired at the fair price, leaving no upside.
TAST shares are worth $9.37, an EV/IC of 1.2x, offering a mere 16% upside.
For an okay business, I demand a larger margin of safety and would build a position if the stock dips below $6.
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