Franchise P/E

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Dictionary Says

Definition of 'Franchise P/E'

The expected value of new business opportunities available to a business. The franchise approach to evaluating a company breaks down the company's observed P/E into two primary components: the P/E coming from the company's business activities (base P/E) and the franchise P/E. In this sense, the franchise P/E = observed P/E - base P/E. It is a function of the rate of return on a business opportunity (the franchise factor) relative to the size of the opportunity (the growth factor).

Franchise Factor (FF) x Growth Factor (G) = (1/k - 1/ROE) x g/(k-g), where:

k = cost of equity
g = growth
Investopedia Says

Investopedia explains 'Franchise P/E'

The major factors determining the franchise P/E are the differences between the return on the new opportunity and the cost of equity. Investors should consider the growth rate and how long growth can be sustained, as well as the feasibility of the estimates (after all, they are expectations and not reality).
Search results for

'Franchise P/E'

  • Popeyes' Lucrative Franchise Model

    http://stocks.investopedia.com/stock-analysis/2011/Popeyes-Lucrative-Franchise-Model-AFCE-WEN-JACK-YUM-MCD0530.aspx
    ... The wild card is how fast the company can grow franchise revenues and the total
    top line. ... At a forward P/E of 17, AFC will need to grow in the double digits to ...

  • Buffalo Wild Wings Priced For Growth

    http://stocks.investopedia.com/stock-analysis/2011/Buffalo-Wild-Wings-Priced-For-Growth-BWLD-CMG-RRGB-DRI-THI0215.aspx
    ... full year rose 13.8% to $613.3 million as restaurant sales improved 13.6% and franchise
    royalties and ... At a forward P/E of more than 22, there is quite a bit of ...

  • Caribou’s Rapid Growth Trajectory

    http://stocks.investopedia.com/stock-analysis/2011/Caribous-Rapid-Growth-Trajectory-CBOU-GMCR-SJM-KFT-SLE1117.aspx
    ... Franchise sales improved 30.3% to make up 3.7% of sales on the opening of 3 net ... At
    a current forward P/E of nearly 34, much of this growth is already priced ...

  • An Even Outlook On Rocky Mountain Chocolate Factory

    http://stocks.investopedia.com/stock-analysis/2011/An-Even-Outlook-On-Rocky-Mountain-Chocolate-Factory-RMCF-DRI-BOBE-FRS-PFCB1014.aspx
    ... stores were in operation and consisted primarily of the namesake franchise, with
    a ... Negative stock market sentiment has also sent its forward P/E into a more ...

  • Popeyes On A Tasty Growth Trajectory

    http://stocks.investopedia.com/stock-analysis/2011/Popeyes-On-A-Tasty-Growth-Trajectory-AFCE-WEN-PEP-KO-YUM0315.aspx
    ... Logically, franchise revenues increased 4% and grew to 61.1% of sales ... AFC currently
    has a trailing P/E of just over 16, if it hits the high end of guidance, but ...

  • Jack In The Box Ends Its Year On A High Note

    http://stocks.investopedia.com/stock-analysis/2011/Jack-In-The-Box-Ends-Its-Year-On-A-High-Note-JACK-MCD-WEN-CMG-SONC1124.aspx
    ... The Bottom Line On a forward basis, Jack in the Box trades at a price-earnings
    ratio (P/E) of 14, if it hits the high end of its guidance. ...

  • Unmatched Consistency From TJ Maxx

    http://stocks.investopedia.com/stock-analysis/2011/Unmatched-Consistency-From-TJ-Maxx-TJX-BIG-PIR-WMT-JWN1121.aspx
    ... Big Lots and the Nordstrom Rack franchise from Nordstrom (NYSE:JWN) are experiencing
    similarly ... TJX's stock isn't overly cheap at forward P/E ratio of 13, but ...

  • Gilead's Uncertain Future

    http://stocks.investopedia.com/stock-analysis/2010/Gileads-Uncertain-Future-GILD-BMY-JNJ-LLY-FRX0426.aspx
    ... This combined with a low double-digit P/E ratio makes it a seeming steal for investors.
    Unfortunately, patent expirations for its HIV franchise are on the ...

  • Jack Should Set Qdoba Free

    http://stocks.investopedia.com/stock-analysis/2010/Jack-Should-Set-Qdoba-Free-JACK-CMG-YUM-WEN-THI1125.aspx
    ... Chipotle trades at a forward P/E above 40. ... under one corporate umbrella and focus
    on selling struggling stores while growing it the successful Qdoba franchise. ...

  • Money Is Tight At Rock Mountain Chocolate Factory

    http://stocks.investopedia.com/stock-analysis/2012/Money-Is-Tight-At-Rock-Mountain-Chocolate-Factory-RMCF-BRK-A-BRK-B-TR0124.aspx
    ... were actually negative, as "the result of a change in the franchise fee associated ...
    At a forward P/E below 14, the stock is reasonably valued, but likely won't ...

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