Bear Of The Day: Carrols (TAST)

 | Mar 20, 2020 06:47AM ET

Carrols Restaurant Group Inc. (TAST) had high hopes coming into 2020. But this Zacks Rank #5 (Strong Sell) is going to take a hit from the impacts of coronavirus shutdowns.
Carrols is one of largest restaurant franchisees in the United States, and currently operates 1,099 restaurants. It is the largest Burger King franchisee in the United States currently operating 1,034 Burger King restaurants and in 2019, it acquired 65 Popeye restaurants. It has operated Burger King restaurants since 1976.
2020 Plans out the Window?
On Feb 25, Carrols reported its fourth quarter and full year results.
For the full year, at Burger King restaurants the comparable restaurant sales rose 2.2% compared to a 3.8% increase in 2018.
That's a 2-year stacked increase of 6%.
Popeyes only had an 8-month ownership period but comparables were up 11.9% compared to the same time period under the prior ownership.
In 2020, it was expecting to prioritize organic sales and margin growth and aggressively reduce its capital spending compared to 2019.
It expected projected net capital expenditures in 2020 of $550 to $65 million, down from $98 million in 2019.
Comparable sales for Burger King were expected to be up 2% to 3% in 2020.
Shares Have Plunged 80% Year-to-Date
But then, in March, the coronavirus impacts hit the United States. Those included restaurant closures and cities in "shelter in place" mode which put a damper on consumer spending.
Carrols shares have plunged 80% in 2020 and are down 86% in the last year.