This restaurant beat last quarter’s earnings by three cents a share.
Fiesta Restaurant Group (FRGI)
from Cabot Stock of the Month
Fiesta Restaurant Group (FRGI), originally recommended by Cabot Top Ten Trader, released a fine fourth-quarter earnings report last week, beating analysts’ estimates on both revenue and earnings.
So why, as several readers asked, did the stock finish down in response? There’s no one simple answer to this, but there are several partial answers.
First, as I’ve mentioned, FRGI is relatively lightly traded; average trading volume over the past 30 days is just 361,000 shares, so it will not trade quite as rationally as a more liquid stock. Second, FRGI was up three days in a row going into the report; knowing that stocks ebb and flow, a down day was not unexpected. Third, a brokerage firm downgraded the stock from Strong Buy to Outperform after the report (most likely because of valuation).
The important thing from my perspective is that the company’s great expansion remains on track and that the stock is still very strong, well above its 50-day moving average. BUY.
Timothy Lutts, Cabot Stock of the Month, www.cabot.net, 978-745-5532, February 2015