North Carolina-based Driven Brands Holdings Inc. (NASDAQ: DRVN), which went public in January 2021, is one of the largest automotive services companies in North America. The company’s financial performance has been impressive, and its prospects appear very bright. On TipRanks, analysts, bloggers, hedge funds, and retail investors look bullish, which makes DRVN stock a good investment option.
The $5.4-billion company addresses the needs of commercial and retail customers, which include vehicle repair, oil change, car wash, paint, and maintenance. Its key business brands are CARSTAR, Take 5 Oil Change, Maaco, Meineke Car Care Centers, and 1-800-Radiator & A/C.
Through the initial public offering (IPO) of approximately 31.8 million shares for $22 per share, Driven Brands received proceeds of $652 million in January 2021. This amount was used to meet the IPO expenses and repay debts. Also, $99 million was received from selling roughly 4.8 million shares to underwriters. Shares of Driven Brands have grown 22.7% since the IPO.
The stock has been awarded three Buy recommendations against one Hold by analysts covered by TipRanks. With a Strong Buy consensus rating, DRVN’s average price target of $37 mirrors upside potential of 13.01%.
Also, bloggers are 100% Bullish on DRVN stock, compared with the sector average of 69%.
Now, let’s delve deeper into the factors that have boosted the prospects of Driven Brands.
Factors Supporting DRVN’s Growth Story
While the company’s total addressable market is worth $325 billion, it has <5% share in the industry. Driven Brands could leverage such immense growth opportunities with diverse service offerings, its dedicated customer base, and a wide network of stores. Exiting the second quarter of 2022, the company operated or franchised > 4,600 locations in 49 states of the United States. Internationally, it has a presence in 14 countries.
Also, the company’s innovative capabilities and zeal to boost opportunities through investments in high-quality businesses is a boon. In the first half of 2022, the company spent $394.4 million in business acquisitions. Interestingly, during the same period, the company completed 12 buyouts in the Car Wash segment, two in the Maintenance segment, and four in the Paint, Collision & Glass segment.
Over the long-term, Driven Brands anticipates organic revenues and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) to grow in the low-double digits. Also, it expects adjusted net income (from organic activities) to expand in the mid-to-high teens (%). Further, the company expects adjusted EBITDA, from organic and inorganic actions, to be >$850 million by 2026.
In July 2022, the President and CEO of Driven Brands, Jonathan Fitzpatrick, said, “We have significant momentum across our business capitalizing on the benefits of our scale, the quality of our offerings, the strength of our brands, our best-in-category data and marketing capabilities, and our ability to generate robust cash flow. We are delivering against our Dream Big plan of at least $850 million of adjusted EBITDA by the end of 2026, demonstrating our ability to drive significant shareholder value over time.”
For 2022, the company forecasts revenues to be $2 billion, up from $1.9 billion stated earlier, and adjusted earnings to be $1.17 per share, above $1.04 per share guided previously. Adjusted EBITDA is predicted to be $495 million in the year versus $465 million projected earlier.
Hedge Funds & Retail Investors Are Bullish on DRVN Stock
According to TipRanks, hedge funds have purchased 162 thousand shares of Driven Brands in the last quarter. Overall, they are bullish on the stock.
Also, portfolios with investments in DRVN stock have increased 1.2% in the last 30 days and 0.3% in the last seven days.
Concluding Remarks
The aforementioned growth factors, promising comments by the company’s management, financial projections for 2022, and long-term targets should boost the confidence of prospective investors in the stock.
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