Checking In With This Restaurant Name Ahead of Earnings

The security remains up over 39% year-over-year

May 11, 2021 at 11:20 AM
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The shares of Carrols Restaurant Group Inc (NASDAQ:TAST) are down roughly 2% at $5.77 at last check. The negative price action comes just a few days prior to the major franchisee's first-quarter earnings report, which is due out before the open on Thursday, May 13. Below, we will dive into how the equity has performed on the charts as of late, and explore some of its previous post-earnings activity.   

On the charts, the security has been cooling off from a March 15, roughly two-year high of $8.09. Shares have also slipped below the 40-day moving average, which has kept a tight lid on gains over the past couple of months. Year-over-year, though, TAST remains up 39.5%.

Over the last two years, the equity has had an overall dismal history of post-earnings reactions. More specifically, six of these next-day sessions were lower during its past eight reports, including a 11.6% drop in November. Plus, the security has averaged a post-earnings swing of 10.3% in the last eight quarters, regardless of direction.

From a fundamental point of view, Carrols Restaurant stock is still a decent growth candidate, despite struggling on the bottom-line for the past two years. The company was able to maintain revenue growth during the pandemic, increasing it by 5.8% in 2020. Plus, revenue is up 42% since 2017. And though TAST's net income fell $29.46 million in 2020, the company managed to beat its 2019 net income results by roughly $2.5 million.

The restaurant name will need to increase its cash balance in order to start seeing substantial growth. The company currently holds $64.96 million in cash, with $1.34 billion in debt, making TAST a high-risk, yet high-reward option. It is also worth noting that with a small market cap of close to $300 million, Carrols Restaurant stock has plenty of room to run.


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