Strong financials, strong cash flows, strong shareholder interests, and strong hidden assets. Bowl for America will easily return above a 20% return without making significant changes. It appears that this operator is like Berkshire Hathaway when Buffett bought it. Bowling has a mediocre if doubtful future; why not shift operations to a different type of business or purchase subs?
Total Market Value – 81.7 MM
Assets – 30,485,650 with no intangible values and 17 commercial properties valued at cost and paid off.
Liabilities – 4,552,000 with no significant long term liabilities
Equity – 24,578,230
Revenue – 24,770,884
Cash Flow – 4,015,939
Net Income – 3,785,985
Dividend Payout Ratio – 90% or more
CapEx – $1MM to $2MM per year.
Can easily finance a dividend with debt. Why not finance more operations with debt?
Also sitting on $7MM of stocks unmanaged.
Issues are the governance – supervoting B Shares spoil any chance of controlling the company. Many of the board are largest shareholders and former employees. No successors for the 86 year old Les Goldman. B shares have 10 votes per 1 A vote. Maximum amount of voting rights is 21% if all A shares are owned.
Bowling is reserved for the lower classes, and is discretionary – thus cyclical. In a downturn, BWL will get hurt.