Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Del Taco Restaurants Stock Gained 14% in 2020

By Demitri Kalogeropoulos - Jan 4, 2021 at 9:55AM

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

The fast-food chain took a hit from COVID-19 closures but rebounded quickly.

What happened

Del Taco ( TACO -0.13% ) shareholders trailed a booming market last year. Their stock gained 14% in 2020, compared to the 16% increase logged by the S&P 500, according to data provided by S&P Global Market Intelligence.

Still, investors are likely pleased with the results, given that the fast-food chain had been down by more than 60% at one point in the year.

A man holding to-go food.

Image source: Getty Images.

So what

Management said in late July that COVID-19 closures had a significant but short-term impact on Del Taco's stores. Sales plunged by over 20% in the four weeks that ended on April 21, but declines improved to 7% in the following month and reached a flat result by mid-June.

Executives said they were "very pleased" with these results, given the geographic focus of the brand in areas like California and Nevada, where outbreaks had been significant. Most of Del Taco's dining rooms were closed for several weeks through the early summer months.

Now what

The rebound momentum continued into the third quarter, but Del Taco struggled with a more competitive selling environment in that period, and investors' lukewarm reception to that report ended up pushing the stock's return just below the broader market.

Del Taco might shift that sentiment when it reports Q4 results, but for now, investors are approaching the stock with caution while they wait for clarity about whether its growth rate is accelerating or heading back toward negative territory.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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

Del Taco Restaurants, Inc. Stock Quote
Del Taco Restaurants, Inc.
TACO
$7.53 (-0.13%) $0.01

*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 service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

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

Our Most Popular Articles

Premium Investing Services

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