Alsea's business model generates operational leverage based on lower variable costs and traffic growth driven by brand recognition is a significant driver of top-line and EBITDA growths. Conversely, it is susceptible to margin erosion in the event of significant slowdown in sales growth and discretionary spending. Alsea also generally has grown through acquisitions, which carry risks, such as price discipline, financial leverage, and integration risk.
If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty achieving our target price.
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