What Does Collins Foods Do?
Collins Foods Limited [ASX:CKF] operates 172 KFC stores in Western Australia, the Northern Territory and Queensland. Its stable also includes the Sizzler brand in Australia and Asia, and Snag Stand.
What’s Happening to the Collins Foods Share Price?
Here is a daily chart of the stock…
You can see the stock has bucked the trend of the wider market lately to see a prodigious move up. On 25 June the company released a strong full year announcement. That included a better than anticipated performance from its KFC stores in Queensland and Western Australia.
What Now for Collins Foods ?
According to its recent presentation, underlying net profit for the financial year was up 37% and its dividend increased 9.5% on the previous result. Net debt dropped by $5.2 million.
The KFC franchise is responsible for the majority of its increase in earnings, and will continue to be. The Sizzler brand is now regarded as ‘non core’ for its growth plans in Australia and will not receive further capital investment.
The KFC business will have eight new stores built, alongside the remodelling of 18 existing stores. There’ll be further investment in the Snag Stand brand.
The market is pricing in a continued favourable environment for the company, as the stock continues to run higher after these announcements were made public.
Editor, The Daily Reckoning