NEW YORK (TheStreet) --Shares of Carrols Restaurant Group Inc. (TAST) - Get Report are down -2.95% to $6.59 on Tuesday after the company reported sales and earnings declined for the 2014 first quarter.

For the 2014 first quarter the company reported restaurant sales decreased 3.0% to $151.5 million, from $156.1 million for the year ago quarter.

Net loss was -$7.4 million, or -32 cents per diluted share versus a net loss of -$5.2 million, or -23 cents per diluted share from the 2013 first quarter.

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The company reported restaurant-level EBITDA totaled $13.2 million, compared to $11.8 million from the same period last year.

Adjusted EBITDA was $3.2 million, from $3.3 million during the same quarter the prior year.

Carrols Restaurant Group owns two restaurant brands, Pollo Tropical and Taco Cabana. The company also owns and operates a number of Burger King restaurants under franchise agreements.

TheStreet Ratings team rates CARROLS RESTAURANT GROUP INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CARROLS RESTAURANT GROUP INC (TAST) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio is very high at 2.08 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.27, which clearly demonstrates the inability to cover short-term cash needs.
  • The gross profit margin for CARROLS RESTAURANT GROUP INC is rather low; currently it is at 16.52%. Regardless of TAST's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TAST's net profit margin of -1.24% significantly underperformed when compared to the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, CARROLS RESTAURANT GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 196.42% to $5.40 million when compared to the same quarter last year. In addition, CARROLS RESTAURANT GROUP INC has also vastly surpassed the industry average cash flow growth rate of -85.10%.
  • This stock has increased by 49.68% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in TAST do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: TAST Ratings Report

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