Del Taco (TACO 12.37, -0.22) has given up 1.8% after missing earnings estimates and providing cautious guidance.
The fast food chain reported below-consensus fourth quarter earnings of $0.19 per share on revenue of $150.20 million, which grew 12.6% year-over-year, slightly exceeding market expectations. On a comparable 16-week basis, revenue grew 6.4% year-over-year.
Although the company missed earnings estimates, its comparable restaurant sales increased 5.5%, representing the 13th consecutive quarterly increase. Comparable sales at company-owned restaurants grew 5.3%, representing the 18th consecutive quarterly increase.
The average check at company-operated stores grew 3.3% with menu mix increasing 1.0% and transactions increasing 2.0%.
Restaurant contribution margin improved 30 basis points year-over-year to 21.5%.
Del Taco opened five company-owned restaurants and two franchised locations during the fourth quarter. So far in 2017, two company-owned stores in San Diego were sold to a franchisee and a franchise development agreement was signed in West Palm Beach, FL.
Expecting to face a challenging environment, Del Taco issued below-consensus guidance for fiscal year 2017, expecting to generate earnings between $0.52 and $0.55 per share on revenue between $466 million and $476 million. System-wide same store sales are expected to grow between 2.0% and 4.0%.
Including today's decline, Del Taco is now down 12.4% so far in 2017 versus a 6.5% gain in the consumer discretionary sector.