Carrols Restaurant Group, Inc. – Momentum (TAST)

Carrols Restaurant Group, Inc. (TAST) recently moved back within striking distance of its multi-year high after reporting a 41% earnings surprise. With an average earnings surprise of 25% over the last three quarters and estimates on the rise, this Zacks #1 Rank stock is a tasty pick for momentum.

Company Description

Carrols Restaurant Group, Inc., through its subsidiary, Carrols Corporation, owns and operates quick-casual and quick-service restaurants in the United States, including 303 Burger King, 90 Pollo Tropical, and 157 Taco Cabana. The company was founded in 1960 and has a market cap of $220 million.

TAST got a nice boost on November after reporting strong Q2 results that included another impressive earnings surprise.

Third-Quarter Results

Revenue for the period was up 5% from last year to $212 million. Earnings also came in strong at 24 cents, 41% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 25% over the last four quarters.

The good quarter was led by the company’s Pollo Tropical and Taco Cabana restaurants, where sales were up 9% from last year to $121 million. Same-store sale at Pollo Tropical were up 7.9% and 5.3% at Taco Cabana.

Estimates

We saw some pretty solid movement in estimates off the good quarter, with the current year gaining 11% to 83 cents. The next-year estimate added 9% to 88 cents, a respectable 9% growth projection.

Valuation

But in spite of the gains, TAST still looks reasonably priced, with a forward multiple of 12X a discount to the industry average of 17X.

2-Year Chart

On the chart below, shares have seen big gains over the last two years, recently turning higher on the good quarter. Look for support from the trend on any weakness.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.

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