South Africans can buy Steers, Wimpy, and Debonairs for cheap

Despite delivering double-digit profit growth and over R1 billion in revenue from its Leading Brands division, analysts still believe that Famous Brands – which owns Steers, Wimpy, and Debonairs – remains undervalued.

Despite mounting consumer pressure, the group’s latest results have strengthened the case for the fast-food giant as one of the more attractive consumer stocks in South Africa.

Famous Brands’ origins date back to the early 1960s, when the Halamandres and Halamandaris family business, comprising only the Steers brand and a limited supply chain, was founded.

Since then, Famous Brands has grown to become Africa’s largest restaurant franchisor, with over 3,000 stores across the continent.

Its portfolio also comprises some of South Africa’s biggest restaurant chains, including Debonairs Pizza, Wimpy, and Mugg & Bean.

While Famous Brands’ core operations are in the dining sector, it also operates across retail, logistics, and manufacturing.

On 18 May 2026, Famous Brands released its annual results for the year that ended February 2026, which revealed that the group increased revenue by 5.6% to R8.74 billion, while operating profit rose 4.5% to R955.08 million.

Profit for the year climbed 11.8% to R653.53 million, with headline earnings per share increasing by 12.12% to 583 cents.

A major contributor to the company’s performance was its Supply Chain division, where revenue grew 7.21% to R6.18 billion.

Famous Brands said investments in logistics, manufacturing upgrades, and product development are expected to further improve efficiency, product quality, and profitability over the next two years.

The company also completed its logistics platform overhaul during the reporting period, a project which has spanned multiple years.

Within its restaurant portfolio, the Leading Brands division crossed the R1 billion revenue mark after growing revenue by 5.95% to R1.03 billion. Operating profit for the segment increased to R541.85 million.

“Our restaurant pipeline is healthy, with interest from both new and existing franchise partners,” the group said.

However, the group’s Signature Brands portfolio, which includes Vovo Telo, Turn ‘n Tender, Mythos, and LUPA Osteria, remained under pressure. Revenue rose marginally to R201.84 million, but operating losses deepened to R10.59 million.

Looking ahead, Famous Brands said it plans to focus on delivery services, smaller-format stores, and drive-thrus, while also expanding further into Africa, the Middle East, and Malaysia.

Despite a strong performance, Famous Brands remains undervalued

Speaking on BusinessDayTV, Umthombo Wealth’s Alex Duys said he believes Famous Brands remains one of the more attractive South African consumer stocks despite concerns about pressure on household spending.

Duys explained that many investors are focusing too heavily on the weak consumer environment and overlooking the company’s longer-term investment case.

“I’m going for Famous Brands. I think a lot of investors are currently just looking at the economic situation for the consumer and saying, ‘Well, that’s bad for Famous Brands.’ I think they miss the investment case here,” he said.

According to Duys, the group has consistently delivered solid results over the past few years despite a difficult operating environment.

He pointed to steady revenue growth, improving margins, and ongoing operational investments as key strengths supporting the business.

“The last couple of years, they have delivered good results,” he said. “My investment piece is pretty much that they continue to give muted revenue growth, with some margin expansion.”

He added that the company’s investments in infrastructure and logistics are beginning to support profitability and cash generation.

“They have invested quite a lot in the cold storage and so forth, and continue to pay down debt, and now they’ve added another lever to that, which is share buybacks,” he said.

Duys believes these factors position the company to continue growing earnings at a healthy pace over the next few years.

“So we think they can easily compound earnings by low double digits over the next two to three years,” he said.

Duys also argued that the market is undervaluing the group relative to its financial quality and shareholder returns.

“Yet, you’re paying pretty much a P/E (Price-to-Earnings Ratio) of eight and a half, dividend yield of 7.5%, which we think is extraordinary value for a business that’s got ROEs almost close to 40% as well,” he said.

For investors seeking exposure to the South African economy through a well-established consumer business, Duys said Famous Brands stands out because of its combination of profitability, dividends and valuation.

“If you want to have some SA Inc. exposure at a high margin of safety, we think Famous Brands ticks those boxes,” he said.