Benihana Inc. has commenced the New Year by boosting investors’ wealth as it announced the first dividend payment in the company’s history. The decision was based on the company’s growth prospects, solid balance sheet, healthy free cash flows and earnings power.
The leading operator of Japanese restaurants in the U.S will pay an initial quarterly dividend of 8 cents a share on January 30, 2012, to shareholders of record as of January 13, 2012. This equates to an annual payout of 32 cents, translating into a dividend yield of roughly 3.0% based on the closing price on January 3.
Benihana's forward annualized dividend yield of 3.0% has surpassed the industry average of 2.08%. It has surpassed the forward annualized dividend yields of 1.93% and 2.79% of restaurant biggies Yum! Brands Inc. (YUM - Analyst Report) and McDonald’s Corp. (MCD - Analyst Report), respectively. However, the yield of Benihana lagged Darden Restaurants Inc’s. (DRI - Analyst Report) dividend yield of 3.77%.
We believe that the commencement of dividend payment affirms the company’s optimistic outlook and shows that it is heading toward strong future growth.
The Miami, Florida-based company posted earnings of 5 cents per share in the second quarter of 2012, which improved considerably from both the Zacks Consensus Estimate of break-even earnings and the year-ago quarter loss of 21 cents. The better-than-expected results were driven by higher sales.
Total revenue in the quarter appreciated 5.6% year over year to $76.2 million, benefiting from restaurant sales growth and marked the seventh consecutive quarter of comparable restaurant sales growth.
At the end of the second quarter, the company had cash and cash equivalents of $6.3 million and total current asset of $19.1 million.
Moreover, the company has come up with solid comps in the first two months of the third quarter of 2012. Continued strong performance assures a solid holiday season at Benihana. Hence, we expect the company to finish third quarter 2012 on a strong note.
Benihana currently operates 96 restaurants, including 63 Benihana Teppanyaki restaurants, 25 RA Sushi Bar restaurants and 8 Haru sushi restaurants. Additionally, the company has 18 franchised Benihana Teppanyaki restaurants, which are operational in the U.S., Latin America and the Caribbean.
Benihana currently retains a Zacks #3 Rank that translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.