At the time of writing, Collins Foods share price is trading at $9.77, up 4.49%.
Collins Foods Ltd [ASX:CKF] delivered strong earnings despite COVID.
Collins Foods and COVID
Collins Foods operates Sizzler, Taco Bell and KFC, with KFC operations in both Australia and Europe.
The Australian division of KFC recorded strong revenue growth of 15.6% compared to the prior corresponding period for HY21.
Growth is helped by an expansion in delivery capabilities available from three aggregators — Deliveroo, Menulog and DoorDash.
Now available at 178 restaurants, up from 137 at the end of FY20.
The KFC Europe division saw growth of only 1.1%, weighed down by COVID-19.
With the second wave of the virus moving across Europe and stricter lockdowns in place, the company expect this will impact the company’s second-half performance.
For Taco Bell, the pandemic put a halt on expansion plans for the company. The pipeline for expansion will be in place for FY22.
Sizzler sadly is no more.
The nine remaining Sizzler restaurants in Australia were closed by 15 November this year.
Revenues declined 57.1% to $8.7 million, with SSS declining 50.7% and EBITDA declining to $(0.6) million.
The standout performers for the company are the KFC divisions, with KFC Australia being the main driver.
What’s next for Collins Foods?
Long term, the company will be expanding with plans in place to build another 66 KFC restaurants in Australia by December 2028. Discussions are currently under way with YUM — KCF’s parent company.
The company will also expand KFC Europe and Taco Bell in Australia.
Looking into the charts, the short-term picture may look a bit different.
The share price fell over 67% during the COVID outbreak before recovering well, rising above pre-pandemic levels.
At the time of writing, the share price sat below the resistance level of $9.91.
If the price can break this level, it may move up to challenge the all-time high of $11.14.
If the price falls to the downside, the levels of $8.95 and $7.38 may be enough to halt the fall.
While Collins Foods holds large expansion plans, the share price may not follow the current trend up. With the country opening back up and people allowed outside more, the usage of delivery food and fast food may drop, which could bring the share price back down.
Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.
For Money Morning