Del Taco Restaurants

Shares of Del Taco Restaurants (TACO - Get Report)  were down 7% Tuesday after the company reported weak 2018 earnings and issued 2019 guidance below expectations.

Fourth-quarter net income was $5.6 million, or 15 cents a share, well below the $35.2 million, or 89 cents a share, it earned in fiscal fourth-quarter 2017. The four analysts surveyed by Zacks expected adjusted earnings of 18 cents per share.

For the full year, net income was $19 million, or 49 cents a share, compared with $49.9 million, or $1.25 a share, in fiscal 2017.

The second-largest Mexican-American chain by units in the United States reported fourth-quarter revenue grew 7.3% to $157.3 million. Fiscal full-year revenue was $505.5 million, up 7.2% from 2017.

The company issued adjusted 2019 EPS guidance of 47 cents to 52 cents vs. the consensus estimate of 58 cents, according to Bloomberg.

System-wide comparable-restaurant sales rose 1.9% in the fourth quarter, marking the 21st consecutive quarter of gains. Comparable-restaurant sales grew 1.0%, for the 26th consecutive quarter of gains, the company said.

Of the seven analysts surveyed by FactSet, there are four buys and three hold ratings on the stock. The average price target is $13.67 for an implied return of 36%. Wage pressures and potential price hikes are being watched by analysts.

"We achieved our sixth consecutive year of system-wide comparable restaurant sales growth in 2018. This was led by strong franchise comparable-restaurant sales growth across a diverse 13-state footprint that supports Del Taco's brand portability, including 25 new system-wide openings across ten states during 2018 of which nearly half were franchised restaurants," said John D. Cappasola, Jr., president and CEO, in a statement.

"As we move into 2019, we remain focused on our mission to be the leader in the value oriented QSR+ segment. Our transaction driving initiatives are well underway as we enter 2019, led by our digital transformation including the new Del App which has now eclipsed 400,000 registered users and our expansion of Grubhub delivery to all company-operated restaurants," the CEO said.

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