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What: Shares of Del Frisco's Restaurant Group (NASDAQ:DFRG) climbed as much as 10% and finished up 7% after serving up a juicy first-quarter earnings report.
So what: The parent of restaurants including Del Frisco's Double Eagle Steak House and Sullivan's Steak House said sales improved 11.4% to $66.6 million, just shy of estimates at $67.2 million. Meanwhile, its adjusted profit of $0.21 per share beat expectations by a penny, as comps were strong at Del Frisco's Double Eagle, and companywide, same-store sales improved 1.6%. Investors may have been most excited about the up-and-coming Del Frisco's Grille concept, however, which a consulting firm said could eventually grow to 170 locations from just 11 today.
Now what: The restaurant group operates just 40 restaurants currently, so it could grow many times over if it follows its Del Frisco's Grille expansion plan. For the full year, Del Frisco's expects a same-store sales increase of 1.5% to 2.5% and an EPS of $0.94 to $0.98 against expectations of $0.97. The company plans to open five Del Frisco's Grille locations this year. With such a small store base to grow from, Del Frisco's presents an intriguing opportunity in the restaurant industry. With only five new Grille restaurants this year, its growth will not be explosive, but it could turn into a multibagger over the long term. Keep an eye on same-store sales at Del Frisco's Grille as evidence of its growth potential.
Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.