GO
Loading...

Cramer: Extensive Remodeling Paid Off

(Click for video linked to a searchable transcript of this Mad Money topic)

Redesigning a store is a tricky thing to navigate. But Cramer said this company has done it well.

"Last year, AFC Enterprises decided that its Popeyes stores needed a facelift," Cramer explained. Since that time the company has remade 35% of its domestic locations, transforming them into Popeyes Louisiana Kitchen, an homage to the company's origins.

"These remodeled restaurants are seeing sales volumes that are four percentage points higher than the system average, a very nice bump," Cramer said.

And the company intends to redesign substantially more stores. "By the end of the year, AFCE expects to have remodeled 60% of their domestic stores," Cramer explained.

And even though shares have climbed more than 30% ytd, Cramer expects the advance to continue. "I think on that metric alone (remodeled restaurants generating higher sales) there's still a lot of upside left," Cramer explained.

SpxChrome | E+ | Getty Images

The latest earnings seem to confirm the trajectory.

In a report released earlier in the week, the company said it now expects full-year earnings and same-store sales growth to be at the upper end of its prior projections of $1.37 to $1.42 a share and 3% to 4% growth, respectively.

For the period ended April 21, AFC posted a profit of $9.6 million, or 40 cents a share, up from $8.3 million, or 34 cents a share, a year earlier. Excluding the impact of legal fees related to licensing arrangements, year-ago earnings were 35 cents a share. Analysts polled by Thomson Reuters most recently projected earnings of 40 cents a share for the latest period.

Total revenue increased 14% to $60.4 million.

---------------------------------------------------
Read More from Mad Money with Jim Cramer
Cramer: These Stocks May Burn You
Crossroads: The Future of Energy
Defense Stocks: Buys or Overbought?
---------------------------------------------------

"Those are strong results," said Cramer. "Most restaurant stocks are played out, largely they have to raise prices. AFC Enterprises, however, appears to have more growth. I think it's the cheapest restaurant growth story out there."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Symbol
Price
 
Change
%Change
PLKI
---

Featured

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Cramer's New Book