Del Taco (TACO, $9.87) shares tumble after missing Q4 estimates

Shares of Del Taco Restaurants Inc. fell after the company failed to meet its fourth quarter estimates.

Missing earnings estimates by a penny, Del Taco’s Q4 earnings stood at 18 cents per share. However, sales for the quarter came in at $157.3 million, beating estimates by $290,000.  Further, the company issued weak earnings guidance. It expects full-year adjusted EPS somewhere between 47 cents to 52 cents, lower than the estimate of 58 cents.

The company’s CEO is optimistic, however, as he interprets fourth quarter sales to be the sixth year of consistent achievement in a row. He believes that this was made possible by a strong franchise comparable restaurant sales growth across a diverse 13 state footprint that supports Del Taco's brand portability, including 25 new system-wide openings across ten states during 2018 -- of which nearly half were franchised restaurants.

He further commented that amidst challenges like wage and operation inflation, the company has demonstrated effective cost management and pricing strategies to post a strong annual restaurant contribution margin that remained near or above 20% in each of the last four years.

Some of the key Q4 highlights include system-wide restaurant sales up 2.5%, average check growth of 3.6%, 7.2% revenue growth year-over-year, and 25 system wide openings.

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