Fiesta: Zacks’ Bull of the Day Play

Fiesta Restaurant Group, Inc. (FRGISnapshot Report) continues to expand with its hot restaurant concepts. This Zacks Rank #1 (Strong Buy) is expected to grow earnings in the double digits both this year and next.

Fiesta operates 329 fast-casual restaurants under the brands Taco Cabana, which is primarily located in Texas and the Southwestern states, and Pollo Tropical, which is in the Southeastern states, the Caribbean, and Central and South America.

At the end of 2014, the company owned and operated 124 Pollo Tropical and 167 Taco Cabana restaurants, including 2 Cabana Grills. It also franchised 37 Pollo Tropical restaurants in the US, Caribbean, Central and South America and 7 Taco Cabanas in the US.

However, recent strategy has seen an expansion of both chains into new geographic territories with the opening of 5 Pollo Tropical restaurants in Texas and one Cabana Grill restaurant in Florida in the fourth quarter.

In 2014 it grew by 26 restaurants.

Double Digit Revenue Growth in 2014

On Feb 19, Fiesta announced its 2014 full year results which saw revenue rising 10.8% to $611.1 million.

Both chains saw comparable sales increases.

Pollo Tropical jumped 6.6% as comparable guest traffic rose 4.6% while Taco Cabana rose 3.3%.

For 2015, the company said it was focusing on continued growth and completing the reimaging of its Taco Cabana system and beginning the reimaging of its Pollo Tropical system.

Q1 Earnings Coming Up

Fiesta is expected to report first quarter earnings on Apr 30.

It has an excellent track record of beating the Zacks Consensus, having done so every quarter except one since its 2012 IPO.

The restaurant industry also ranks in the top 34% of Zacks Ranked industries.

Analysts are bullish on 2015.

They expect earnings to jump 17.5% and another 17.7% in 2016.

Shares aren’t cheap though. Investors have been piling into restaurant stocks in 2015.

Fiesta trades with a forward P/E of 36.7 so investors have to know they’re buying the growth. It has a Zacks Value Style Score of D but a Growth Style Score of B.

However, for investors looking for a restaurant stock with double digit growth, Fiesta is one to keep on the short list.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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