Dining on Dodo; Extinct Meat Masquerading as Steak (BLMN)

We’re coming at you early this week to take advantage of a marvelous opportunity from Bloomin’ Brands (NASDAQ:BLMN), operators of steak and fish chophouses since 1988.

We’re no great fans of the restaurant business these days, for a number of reasons.

But when one offers such an inviting risk/reward profile, it’s difficult to steer clear.

Today’s hand-crafted, risk-defined options trade is brought to you by the brothers Saladin…

(Daddy sojourned widely in the Orient…)

This could be a trade for the ages.

Let’s take a look at some numbers:

FUNDAMENTALLY…

• The stock trades with a multiple of 27.44x earnings, a number analysts expect to decrease to just 8.56 a year out.  That’s shorthand for the stock’s price being cut by two thirds.  Or an earnings miracle…
• Dividend is 3.64%, and…
• Price to Book is a fatty 8.53 (!).
• Debt to Equity is far too large at 3.07, and
• EPS this past year were DOWN by 48.30%.
• So what’s to like here…?  Sales have grown over the last five years by a measly 0.90% and Earnings by precisely 0%—zippo!
• Insiders appear to be asking the same question.  They’ve sold $21 million worth of stock over the last six months — a full 56.67% of their holdings.  Do they see something we don’t?

What’s interesting here is how the shares flew higher like a budgie directly after earnings were announced on February 16^th.

Problem was, the bulls couldn’t sustain the gains.  An eleven percent jump was followed by just a few days of marginal increases, and now—the stock looks more like a dodo than a budgie.

Like we’re on the way to giving it all back (see below).

The technicals offer a multitude of reasons to trade BLMN on the downside, but more than that, they offer the key to precisely how to structure the trade for a maximum gain in the shortest possible time frame.

As we detail here—

And let it be His will!

!ברוך הוא וברוך שמו

Many happy returns!

Matt McAbby

Follow @HughLOHaynew