Del Taco Restaurants misses earnings target in Q1

Fast food chain Del Taco Restaurants (NASDAQ: TACO) reported lower earnings on higher revenues for the first quarter of fiscal 2019. Earnings missed the Wall Street forecast by 2 cents, while the top-line matched. The company’s shares fell 3.4% following the announcement.

Revenues of the California-based Mexican-American quick service restaurant climbed 1.5% annually to $114.2 million, which was broadly in line with the estimates. Comparable restaurant sales edged down 0.1%.

Adjusted profit fell to $1.7 million or $0.04 per share from $3.2 million or $0.08 per share in the prior-year period. Meanwhile, reported earnings dropped sharply to $0.04 per share from $0.08 per share in the first quarter of 2018.

CEO John Cappasola said, “We made material progress on our portfolio optimization strategy designed to stimulate new unit development and grow AUV’s, including commencing the marketing of certain company-operated restaurants across four non-core Western markets to the franchise M&A marketplace through our partnership with The Cypress Group.”

READ: PLUG POWER WILL BE LOOKING TO MAINTAIN MOMENTUM IN Q1

Outlook

Meanwhile, Del Taco reaffirmed its guidance for the full year 2019. For this period, Del Taco anticipates generating revenues of $517-$527 million and restaurant contribution margin between 18.1% and 18.6%. Full-year earnings, on an adjusted basis, are expected to come in the range of $0.47 per share to $0.52 per share.

Earlier this year, the company had initiated optimization of its restaurant network through re-franchising. The initiative is expected to shift the current rate of 55% company ownership to about 45% by next year.

TACO shares have been fluctuating between $10 and $11 for the most part of this year. In the trailing 52 weeks, the stock is down almost 3%.

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