Last Update 19 Mar 26

Fair value Decreased 1.28%

DRVN: Accounting Review And Filing Delay Will Eventually Unlock Franchise Upside

Analysts have trimmed the fair value estimate for Driven Brands slightly, from about $19.06 to $18.81, reflecting lower price targets following accounting-related disclosures and the delayed Q4 results.

Analyst Commentary

Recent Street research on Driven Brands highlights mixed views, with several firms cutting price targets and adjusting ratings following the company’s disclosure of accounting errors and the delay in Q4 results and the Form 10-K filing.

Bullish Takeaways

Bullish analysts still see potential upside from current trading levels, even as price targets reset to figures such as US$16.50, which implies some room for improvement if execution stabilizes.
The focus remains on the underlying franchise and service model, which some analysts view as capable of supporting longer term growth once accounting issues are addressed and reporting normalizes.
Extension of the 10-K filing by 15 days is viewed by some as a way to provide more complete information, which can help restore confidence in the financials and in management’s ability to execute.
Where rating changes are less severe than the price target cuts, it signals that a portion of the risk may already be reflected in valuation, according to bullish analysts.

Bearish Takeaways

Bearish analysts point to the accounting related errors across FY23, FY24, and the first three quarters of 2025 as a key risk for earnings quality, which in turn pressures valuation and justifies lower price targets such as US$12.
The downgrade from an Overweight style view to Neutral reflects concern that execution risk is higher until the company provides restated financials and clearer guidance on the impact of the errors.
The delay of Q4 results and the 10-K filing raises questions about internal controls and financial reporting processes, which can weigh on investor confidence and limit near term multiple expansion.
Multiple price target reductions, including the move from US$19 to US$16.50, signal a more cautious stance on growth and profitability assumptions until there is better visibility on the revised numbers.

What's in the News

Class action lawsuit filed alleging inaccurate SEC filings, ineffective internal controls, an unreconciled cash balance starting in 2023, and misstatements of revenue, cash, and operating expenses, with investors able to seek lead plaintiff status until May 8, 2026 (Bronstein, Gewirtz & Grossman, LLC).
Company notified investors that it will be unable to file its next Form 10 K by the SEC deadline, extending the period of delayed financial reporting (Delayed SEC Filings announcement, 02/26/2026).
Collision Group expanding certified repair capabilities nationwide, with more than 300 OEM certifications in place and 37 luxury OEM certifications, covering brands such as Audi, BMW, Jaguar Land Rover, Lexus, Mercedes Benz, and Volvo (Business Expansions disclosure).
Collision Group reports 288 EV repair certifications across its network, including programs with GM BEV, Honda/Acura EV, Tesla, Mercedes Benz EQ, Nissan EV Ready, Polestar, Rivian, VinFast, Lucid, Ford, and GM Fleet, spread across Abra, CARSTAR, and Fix Auto USA locations (Business Expansions disclosure).

Valuation Changes

Fair Value Estimate trimmed slightly from $19.06 to $18.81 per share, indicating a modest reduction in the modeled equity value.
Discount Rate nudged up from 9.79% to 9.83%, a small change that can put mild pressure on the valuation output.
Revenue Growth assumption remains effectively unchanged at around a 0.57% decline, suggesting no material adjustment to top line expectations in this update.
Net Profit Margin essentially flat at about 11.67%, with only a very small adjustment that leaves the earnings profile largely the same in the model.
Future P/E eased slightly from 14.79x to 14.61x, implying a marginally lower valuation multiple applied to expected earnings.

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Key Takeaways

Expansion of higher-margin, non-oil services and digital integration is driving greater profitability and enhanced customer retention.
Strong recurring demand, store growth, and financial flexibility are expected to support sustained revenue and margin expansion.
Driven Brands faces mounting risks from EV adoption, declining franchise sales, market saturation, labor costs, and intensifying competition from automakers' direct service initiatives.

Catalysts

About Driven Brands Holdings

Provides automotive services to retail and commercial customers in the United States, Canada, and internationally.What are the underlying business or industry changes driving this perspective?

Continued growth in the average age of vehicles and post-pandemic increases in miles driven are boosting recurring demand for aftermarket maintenance, which is translating into robust same-store sales growth and a strong pipeline for new store openings-supporting long-term, compounding revenue growth.
Driven Brands is rapidly expanding its network of Take 5 locations (with a 150+ annual unit addition target) and increasing the proportion of stores offering new, higher-margin non-oil-change services, such as differential fluid replacement; this is expected to drive higher average revenue per customer and support gross margin expansion.
Rising consumer preference for convenience and one-stop, multi-service auto care is fueling high attachment rates for ancillary (non-oil) services at Take 5, which now contribute over 20% of segment sales and have significant runway for further penetration-positively impacting net margins and customer lifetime value.
The company is capitalizing on its scale and operational leverage by integrating digital platforms and data analytics to enhance customer retention, increase predictive maintenance offers, and optimize store-level economics, likely driving improvements in both net margins and earnings predictability over time.
Strategic deleveraging following asset sales and strong free cash flow generation from franchise and international operations is enhancing financial flexibility, supporting future growth investments and potentially reducing interest expense, thereby positively impacting net income and EPS.

Driven Brands Holdings Earnings and Revenue Growth

Driven Brands Holdings Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Driven Brands Holdings's revenue will grow by 2.8% annually over the next 3 years.
Analysts assume that profit margins will increase from -12.7% today to 9.6% in 3 years time.
Analysts expect earnings to reach $250.1 million (and earnings per share of $1.52) by about September 2028, up from $-306.6 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.3x on those 2028 earnings, up from -10.2x today. This future PE is lower than the current PE for the US Commercial Services industry at 26.9x.
Analysts expect the number of shares outstanding to grow by 0.1% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.46%, as per the Simply Wall St company report.

Driven Brands Holdings Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Increasing adoption of electric vehicles (EVs) poses a significant long-term risk, as Driven Brands' core services (such as oil changes) become less relevant-potentially reducing future revenue streams as EV penetration accelerates.
The company's Franchise Brands segment is experiencing ongoing same-store sales declines, with no near-term resolution in sight and continued headwinds for collision and discretionary services like Maaco, which could weigh on system-wide revenues and net margins if trends persist.
Overreliance on growth from the Take 5 Oil Change business and aggressive unit expansion exposes Driven Brands to slower incremental returns, higher new store opening expenses, and possible declines in same-store sales growth as market saturation approaches, putting pressure on EBITDA growth.
Labor shortages and rising wages, particularly for certified trades in the collision and maintenance segments, may increase operating costs for franchisees and company locations, risking compression of operating margins and reduced profitability.
The fragmented nature of the automotive aftermarket, coupled with potential for OEMs to expand direct-to-consumer service offerings using connected car technology, could erode Driven Brands' competitive advantages and customer base over time, hurting revenue and long-term earnings visibility.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $21.923 for Driven Brands Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $25.0, and the most bearish reporting a price target of just $18.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.6 billion, earnings will come to $250.1 million, and it would be trading on a PE ratio of 18.3x, assuming you use a discount rate of 8.5%.
Given the current share price of $19.08, the analyst price target of $21.92 is 13.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Aging Vehicles And Digital Integration Will Expand Future Potential