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I have a slightly different view than DavidG. I have experiance w/ 2 companies that do/did what your are talking about, takeing distressed shops and turning them around. If they are good at what they do they are money makers in the short term (2-10 years).

Landry's went public back in 1993 with 11 stores, it now has a little over 220. About half of which have been new openings the other half being acquisitions of distressed companies/poorly managed operations. The company only grows through new openings or acquisitions, it does not franchise (the CEO/President is a hands on operator.)

They also may be a bit volitile.

That would be true based on what I've seen... although the analyst that I've read (including Valueline) have come to regard their merger ability as top notch. This is a paraphrase of Valueline, but it went something along the lines of "When viewing the manner in which past mergers have been assimilated into the corporate structure, such as Rainforest Cafe, there is no reason to believe that the management will have any problem integrating future acquisitions with such ease." (Again that is a paraphrase based off of my memory of the summary---I THINK I got the spirit right.)

If the company knows what its doing it rebounds. This can happen over and over, the analysts never seem to figure it out.

So far the company has had AT LEAST five quarters of exceding analyst expectations by an average of about 80%! When it comes to growth analysis the company looks GREAT. The stock has increased 400 percent since my wife worked for them a year and a half ago---when she was a victem of one of their acquisitions (and closures.) Their stock was selling at around 5-6$ it was recently up to 26$, but has dropped to around 23 or so.

I assume you've done thorough DD


So you might want to compare them to other established chains.

I'm looking at a fairly well established chain---Landry's Seafood. They own Landry's Seafood Restaurants, (acquired in 94) Joe's Crabshack, (acquired in 00) Rainforest Cafe, (acquired in 02) C.A. Muer's which owns a few chains in the midwest, and a acquired numerous mom-and-pop seafood restaurants that have been converted into Landry's or Joe's Crabshacks. They are the second largest seafood restaurant chain in the country---second only to Red Lobster (Darden Inc.)

I am, however, comparing it to other restaurants using Red Lobster (Darden Restaurants Inc---a large cap chain), Applebees(a mid cap chain), and Lonestar (a small cap chain with nearly identical sales) as a basis for my comparison as well as the industry averages. In some categories it is doing very well Book Value/share is about 17$ as compared to 5-7$---altough that will take a hit with the new shares. EPS is strong--again it will take a hit with new shares. The Debt to Equity is already a positive sign---which will only improve as a result of this. And the Acid test/current ratio should improve (depending on the types of debt retired.)

As for the second offering DavidG is probably on target. It is probably cheaper for them to offer more stock and pay down debot or borrow the money. If you want to shop for a good buy point it might be after the second offering when the shares first become 'diluted'.

The long term effects will probably have little to no effect. Either the company will continue to succeed or not.

That's what I was thinking. We might see a dip in prices with the new issue, although if we believe in an truly efficeint market theory, the market will already have reacted to the news that there will be a second offering ;-)

Hmmmm, intersting, I just looked at Landry's price history and in each case where I can *REMEMBER* there being a equity offering the price took a hit!

The offering makes the decision a lot more difficult---if I were just looking at the stock as a potential investment I'd probably walk away and wait until I was more knowledgable on the subject. As it is, I am doing this in part for a graduate class in accounting, and have to make a recomendation as to whether or not we would make a recommendation to buy or not.
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