Fiesta Restaurant (FRGI) Stock Tanks as Q1 Results Miss Estimates
NEW YORK (TheStreet) -- Shares of Fiesta Restaurant (FRGI) - Get Report are plummeting 16.46% to $27.24 on heavy trading volume late Tuesday morning after the Addison, TX-based company reported weaker-than-expected results for the 2016 first quarter.
After yesterday's market close, the owner of Pollo Tropical and Taco Cabana restaurants reported adjusted earnings of 37 cents per diluted share, below analysts' expectations of 40 cents per share.
Revenue rose 7.8% to $176.7 million year-over-year, but fell short of Wall Street's estimates of $177.7 million.
Comparable restaurant sales at Pollo Tropical were flat during the period, while comparable restaurant sales at Taco Cabana increased 1.7%.
Additionally, the stock was downgraded to "neutral" from "buy" at Sterne Agee this morning following the results.
The key point of the firm's original thesis was the portability of the Pollo Tropical brand outside of Florida.
"However, its entry into Texas has been mixed and we see continued challenges (oil-related pressures, cannibalization, over-supply, unfavorable promotional environment & consumer softness), which creates a lack of visibility near term," Sterne Agee wrote in a note.
The firm is moving to the sidelines until clarity improves around the company's return on investment profile and the performance of the Pollo Tropical brand outside of Florida.
About 2.17 million of the company's shares were traded by late this morning compared to its average volume of 370,661 shares per day.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C+ on the stock.
The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations.
However, the team also finds weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: FRGI
