<div id="readability-page-1"><div><h3>Key Insights</h3><ul><li> The projected fair value for Bloomin' Brands is US$7.98 based on 2 Stage Free Cash Flow to Equity </li> <li> Bloomin' Brands is estimated to be 22% undervalued based on current share price of US$6.26 </li> <li>  Analyst price target for BLMN is US$11.29,  which is 42% above our fair value estimate </li> </ul><p>Does the April share price for Bloomin' Brands, Inc. (NASDAQ:BLMN) reflect what it's really worth? Today, we will estimate the stock's intrinsic value  by taking the expected future cash flows and discounting them to today's value.  We will take advantage of the Discounted Cash Flow (DCF) model for this purpose.  Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow.</p><p> We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws.  If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. </p><p>Trump has pledged to &#34;unleash&#34; American oil and gas and these 15 US stocks have developments that are poised to benefit.</p><h2> Crunching The Numbers </h2> <p> We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase.  To begin with, we have to get estimates of the next ten years of cash flows.   Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.  </p><p> Generally we assume that a dollar today is more valuable than a dollar in the future,  so we need to discount the sum of these future cash flows to arrive at a present value estimate: </p><h4> 10-year free cash flow (FCF) estimate </h4><table><tbody><tr><td> </td><td><strong>2025</strong></td><td><strong>2026</strong></td><td><strong>2027</strong></td><td><strong>2028</strong></td><td><strong>2029</strong></td><td><strong>2030</strong></td><td><strong>2031</strong></td><td><strong>2032</strong></td><td><strong>2033</strong></td><td><strong>2034</strong></td></tr><tr><td><strong> Levered FCF ($, Millions) </strong></td><td>US$169.8m</td><td>US$152.3m</td><td>US$81.0m</td><td>US$62.9m</td><td>US$53.6m</td><td>US$48.5m</td><td>US$45.7m</td><td>US$44.2m</td><td>US$43.5m</td><td>US$43.4m</td></tr><tr><td><strong>Growth Rate Estimate Source</strong></td><td>Analyst x3</td><td>Analyst x3</td><td>Analyst x1</td><td>Est @ -22.32%</td><td>Est @ -14.80%</td><td>Est @ -9.53%</td><td>Est @ -5.85%</td><td>Est @ -3.27%</td><td>Est @ -1.46%</td><td>Est @ -0.20%</td></tr><tr><td><strong> Present Value ($, Millions) Discounted @ 11% </strong></td><td>US$152</td><td>US$123</td><td>US$58.6</td><td>US$40.8</td><td>US$31.2</td><td>US$25.4</td><td>US$21.4</td><td>US$18.6</td><td>US$16.5</td><td>US$14.7</td></tr></tbody></table><p><i>(&#34;Est&#34; = FCF growth rate estimated by Simply Wall St)</i><br/><strong>Present Value of 10-year Cash Flow (PVCF)</strong> = US$502m</p><p> We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period.  The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.8%. We discount the terminal cash flows to today's value at a cost of equity of 11%. </p><p><strong>Terminal Value (TV)</strong>= FCF<sub>2034</sub> × (1 + g) ÷ (r – g) = US$43m× (1 + 2.8%) ÷ (11%– 2.8%) = US$515m</p><p><strong>Present Value of Terminal Value (PVTV)</strong>= TV / (1 + r)<sup>10</sup>= US$515m÷ ( 1 + 11%)<sup>10</sup>= US$175m</p><p> The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value,  which in this case is US$677m.  To get the intrinsic value per share, we divide this by the total number of shares outstanding.  Compared to the current share price of US$6.3, the company appears   a touch undervalued    at a 22% discount to where the stock price trades currently.   Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. </p><figure> <img height="380" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/128530849-dcf-1-dark/1744211162184?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="853" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/128530849-dcf-1-dark/1744211162184"/> <figcaption>NasdaqGS:BLMN Discounted Cash Flow April 9th 2025</figcaption></figure> <h2> Important Assumptions </h2><p> We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.  You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at Bloomin' Brands as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 11%, which is based on a levered beta of 2.000. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. </p> <p><span> Check out our latest analysis for Bloomin' Brands </span></p><h3>SWOT Analysis for Bloomin' Brands</h3><div><div><p><strong>Strength</strong></p><ul><li>Debt is well covered by earnings and cashflows.</li></ul> <ul><li>Dividend is in the top 25% of dividend payers in the market.</li></ul> <ul> Dividend information for BLMN. </ul> </div><div><p><strong>Weakness</strong></p><ul><li> No major weaknesses identified for BLMN.</li></ul></div><div><p><strong>Opportunity</strong></p><ul><li>Expected to breakeven next year.</li></ul> <ul><li>Has sufficient cash runway for more than 3 years based on current free cash flows.</li></ul> <ul><li>Good value based on P/S ratio and estimated fair value.</li></ul> <ul><li> Significant insider buying over the past 3 months.</li></ul></div><div><p><strong>Threat</strong></p><ul><li>Dividends are not covered by cash flow.</li></ul> <ul> See BLMN's dividend history. </ul> </div></div><h2> Looking Ahead: </h2><p> Valuation is only one side of the coin in terms of building your investment thesis, and it  ideally won't be the sole piece of analysis you scrutinize for a company.  DCF models are not the be-all and end-all of investment valuation.  Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation.  For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation.   Why is the intrinsic value higher than the current share price?   For Bloomin' Brands, we've compiled three  important  items  you should further research: </p><ol> <li> <strong>Risks</strong>: Every company has them, and we've spotted   <strong> 2 warning signs for Bloomin' Brands </strong>  (of which 1 is significant!) you should know about.  </li> <li> <strong>Management</strong>:Have insiders been ramping up their shares to take advantage of the market's sentiment for BLMN's future outlook? Check out our  management and board analysis with insights on CEO compensation and governance factors. </li><li> <strong>Other Solid Businesses</strong>: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! </li> </ol><p> PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.</p><div><p>If you're looking to trade Bloomin' Brands, open an account with the lowest-cost platform trusted by professionals, Interactive Brokers.</p><p>With clients in over 200 countries and territories, and access to 160 markets, IBKR lets you trade stocks, options, futures, forex, bonds and funds from a single integrated account.</p><p>Enjoy no hidden fees, no account minimums, and FX conversion rates as low as 0.03%, far better than what most brokers offer.</p><p><span>Sponsored Content</span></p></div></div></div>

BLMN

<p>Bloomin' Brands, Inc. (NASDAQ:BLMN) is estimated to be 22% undervalued, with a projected fair value of US$7.98 compared to its current share price of US$6.26. Analysts have set a price target of US$11.29, indicating a potential upside of 42%. The valuation is based on a Discounted Cash Flow (DCF) model, which estimates future cash flows and discounts them to present value. The total equity value calculated is US$677 million, suggesting the stock is undervalued. However, the DCF model has limitations and should be approached with caution.</p>

An Intrinsic Calculation For Bloomin' Brands, Inc. (NASDAQ:BLMN) Suggests It's 22% Undervalued