Carrols Restaurant Group, Inc. (TAST) – Buy

Once again, I added more to my position in Carrols Restaurant Group, Inc. (TAST) today at $10.79/share taking advantage of the recent price drop.

Carrol’s is now my 2nd largest holding.

I think at this level, it’s a great opportunity. The February earnings call had much to like in it. The last quarter and last year has shown the strong marketing capabilities of Burger King and how well Carrols in particular is at executing acquisitions and managing stores, despite increasing costs of beef and labor as well as increasing competitive pressure.

They continue to acquire restaurants which impacts earnings. However, book value continues to increase, which is how I choose to judge their performance along with total sales which continues to grow on same stores and total stores basis.

At this time, it’s estimated that Burger King franchise goes for over $500,000 to start one. However, with Carrols you are getting established franchises with top performing management in place for only $474,240 each as they currently have 807 stores and are valued at $382,712,000. From the earnings call above they have shown they they can quickly absorb and improve acquisitions and have several deals currently in negotiation right now, one of which includes 20-30 more stores. Overall, Carrols seems like a real bargain to me and I may continue to buy more shares if the price stays at this level or goes lower.




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