The resilience of its brands and the strength of its management team has led a leading analysts to upgrade his recommendation on The Restaurant Group’s (TRG) shares to a Buy. Nick Batram of Peel Hunt made the recommendation despite TRG, the operator of Frankie & Benny’s and Garfunkels brands, seeing a 12% decline in its share price since its last AGM statement. Bartram said: “The consumer backdrop remains tough, but the company has a resilient portfolio of brands, high-quality locations and one of the best management teams in the industry. Free cash flow is impressive and expansion capital continues to deliver excellent returns. “We recognise that the room for positive earnings surprises is much less than it was previously, but the medium- to long-term outlook remains positive. In the meantime, the company continues to generate significant cash flow (11% free cash yield) and generate significant returns (>25%) on expansion capex. “The share price traditionally underperforms post the AGM (irrespective of what is announced) for a period of six to eight weeks before recovering strongly ahead of the interim results. A prospective EV/EBITDA of 6.3x to December 2011 is well below the 7-7.5x on which we would expect a quality restaurant business to trade at the current point in the cycle.”