December 5, 2022

Javier14mascherano

Born to perform

Driven Brands drives higher as analysts applaud earnings beat (NASDAQ:DRVN)

2 min read

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Meineke Car Care Center

J. Michael Jones/iStock Editorial via Getty Images

Driven Brands (NASDAQ:DRVN +6.3%) is accelerating on Thursday afternoon after a delayed stock reaction to its first quarter earnings results.

The parent company of MAACO, Meineke Car Care Centers, and other auto-related service providers reported a beat on top and bottom lines for the quarter, while noting a surge in same-store sales amid a significant footprint expansion. Confident commentary on performance for the coming quarters also appeared to encourage the share price reaction following the print.

“So far in the second quarter, we continue to be pleased with our performance,” CFO Tiffany Mason told analysts on Wednesday evening. “We are focused on our proven formula with a platform that is scaled and diversified as formerly simple, we add new stores, we grow same-store sales and we deliver stable margins.”

The optimistic commentary from management is being reciprocated with glowing reviews from analysts as well. Among these analysts, Baird senior analyst Peter S. Benedict was particularly bullish.

“In short, we believe [Driven Brands] (DRVN) is well positioned in today’s challenging macro/spending backdrop given the company’s diversified portfolio of largely needs-based, non-discretionary services and proven track record of market share gains,” he wrote. “The stock looks undervalued to us, particularly considering [Driven Brands’] (DRVN) ability to compound adj-EBITDA at a ~20% pace over the next five years.”

He added that the company’s “labor-light” business model combined with supply chain competitive advantages should sustain the company’s gains for the full year. Benedict reiterated his Outperform rating on shares and assigned a $40 price target to the stock.

Shares gained nearly 7% about an hour prior to Thursday’s market close, gaining sharply from a flat open.

Dig into the firm’s valuation.

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