Please ensure Javascript is enabled for purposes of website accessibility

Why Fiesta Restaurant Group Inc. Stock Surged Today

By Jeremy Bowman - Updated May 8, 2018 at 1:28PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the fast-casual restaurant operator were moving higher on a strong earnings report.

What happened

Shares of Fiesta Restaurant Group Inc. (FRGI -0.86%) were moving higher today after the parent of fast-casual chains Pollo Tropical and Taco Cabana posted better-than-expected results in its first-quarter earnings report. Margins improved at Pollo Tropical, and comparable sales increased at both chains in April after the quarter ended.

As a result, the stock was up 10.8% as of 12:16. p.m. EDT.

The exterior of a Pollo Tropical location

Image source: Pollo Tropical.

So what 

The Fiesta Group said same-stores sales increased 1.1% at Pollo Tropical, but fell 1.7% at Taco Cabana in the period. Still, that was a considerable improvement from the year before. Due to the declines at Taco Cabana and the closing of unprofitable restaurants, overall revenue slipped 3.5% to $169.5 million, but that beat estimates at $164.3 million. 

On the bottom line, an adjusted profit per share of $0.25 fell to $0.15, but that still edged out expectations by a penny. Investors seemed to cheer the company's progress in its strategic turnaround, especially the signs of growth in April.

CEO Richard Stockinger said, "We believe our [strategic] plan is driving intended operational and financial performance improvements," adding that the new hand-battered, citrus-marinated chicken at Pollo Tropical has been extremely successful. He also said that improvements at Taco Cabana were following in line with Pollo Tropical, where the company first implemented its strategic plan.

Now what 

Fiesta Group stock seems to be rising today in part because it had fallen so far during the last few years as the "restaurant recession" squeezed much of the industry. Even after today's gains, the stock is still down 53% over the last three years. 

With comparable sales up 2.8% at Pollo Tropical and 0.9% at Taco Cabana in April, momentum clearly seems to be building. If the company can deliver improvement on the bottom line as well, the stock should continue moving higher.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fiesta Restaurant Group, Inc. Stock Quote
Fiesta Restaurant Group, Inc.
$6.92 (-0.86%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.