Bloomin' Brands stock jumped early Friday after the Wall Street Journal reported investment advisor Starboard Value has become one of the top five investors in the Outback Steakhouse owner.
BLMN surged 8.7% to 27.86 Friday during market trade after the WSJ reported Thursday evening that Starboard owns more than 5% of the company. During Thursday trade, Bloomin' Brands stock fell 3.5% to 25.62. The stock backtracked following a July breakout from a cup-with-handle base. Shares undercut the 27.44 buy point noted by MarketSmith by more than 8%. That triggered the automatic sell rule.
The Tampa, Fla.-based Bloomin' Brands owns and operates more than 1,450 restaurants globally. Its brands include Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill and Fleming's Prime Steakhouse & Wine Bar.
In 2014, Starboard made sweeping changes at Darden Restaurants. The hedge fund took control of Darden's board and implemented a business shift that is cited for helping Darden's stock price growth. Darden shares are up 200% since the end of 2014.
Starboard's goals with Bloomin' Brands are unclear, the Wall Street Journal says, but the investor often implements operational and financial improvements.
Takeover And Consolidations
BLMN stock is up around 25% in 2023, outperforming the S&P 500's 14% gain. Meanwhile, collectively the 28-stocks in the IBD-tracked Retail-Restaurants group are up 22.8% this year.
Bloomin' Brands has averaged 15% EPS growth over the past three quarters. Analysts expect 2023 profit to grow 17% to $2.95 per share and revenue to increase 7% to $4.71 billion.
Earlier this month, Texas-based Brazilian steakhouse chain Fogo de Chao agreed to be acquired by Bain Capital for an undisclosed sum. Authentic Restaurant Brands took Fiesta Restaurant Group private in a $220 million deal. In May, Darden Restaurants bought Ruth's Chris owner Ruth Hospitality Group for $750 million.
Momentum toward consolidation is also strong among grocery chains. On Wednesday, supermarket chain Aldi agreed to acquire Winn-Dixie and Harveys Supermarket from Southeastern Grocers.
The terms of the agreement between the two private companies were not been disclosed. However, it will bolster Germany-based Aldi's presence in the Southeast U.S., giving Aldi 400 new locations. Meanwhile, the $24.6 billion merger between Kroger and Albertsons, announced in October, still awaits Federal Trade Commission approval.
Reuters reported that secretaries of state from seven different states appeals to the FTC to block the Kroger/Albertsons combination, saying that it would harm consumers. A statement from Kroger said the planned deal would be good for consumers and store workers.
Kroger has said the deal is set to be completed in 2024.
The 12 stocks in IBD's Retail-Super/Mini Markets industry group have underperformed the broader market in 2023, gaining 8.8%. However, collectively the stocks have gained around 100% since end of 2019, just before the Covid pandemic.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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