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Del Frisco’s Restaurant Group Announces Better than Expected Earnings

Del Frisco’s Restaurant Group (NASDAQ: DFRG) reported second quarter non-GAAP EPS of $0.20 versus analyst consensus of $0.19. Revenue came in at $60.40 million versus the estimated $59.13 million. Sales were 18% higher year over year.

In the release, the company highlighted some key points:

  • Total comparable restaurant sales increased 2.5%, including an increase of 5.9% at Del Frisco’s and a decrease of 2.7% at Sullivan’s. This follows a comparable restaurant sales increase of 4.2% in the second quarter of the previous year.
  • Total comparable entrees, a measure of traffic, increased 3.2%, including an increase of 5.8% at Del Frisco’s and an increase of 1.4% at Sullivan’s.
  • Cost of sales, as a percentage of consolidated revenues, decreased to 30.0% from 30.7%.
  •  Net income of $4.4 million, or $0.19 per diluted share (on a share base of 23.8 million shares), compared to net income of $3.6 million, or $0.20 per diluted share (on a share base of 18.0 million shares), in the second quarter of last year.
  • Restaurant-level EBITDA, a non-GAAP measure, increased 11.7% to $14.0 million from $12.5 million.

Mark S. Mednansky, Chief Executive Officer of Del Frisco’s Restaurant Group, Inc., said,

“We are very pleased that the efforts of our team produced a 2.5% increase in total comparable restaurant sales and we are very encouraged by the substantial traffic gains realized at both Del Frisco’s Double Eagle and Sullivan’s. Del Frisco’s Double Eagle continues to deliver solid results, Del Frisco’s Grille is on track with its development plan, while during the second quarter we began work on refreshing Sullivan’s with an emphasis on solidifying the brand as an affordable neighborhood steakhouse through the introduction of a fixed-price offering. From a cost standpoint, some operational inefficiencies at newer restaurants and deleveraging at Sullivan’s negatively impacted our restaurant-level margins, however solid controls and lower cost of sales with strong revenue gains allowed us to increase our four–wall profitability.”

In the past six months, the stock is up more than 55 percent. Technically, the stock is a buy after a bullish breakout from a basing pattern in March and April.

Disclosure: At the time of this writing, the author had no position in the company mentioned.

[stock-tools exchange="NASDAQ" symbol="DFRG" image_height="230" image_width="350"]

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