Why Del Taco Stock Plunged Today

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What happened

Shares of Del Taco Restaurants (NASDAQ: TACO) have plunged today, down by 12% as of 2:15 p.m. EDT, after the company reported fourth-quarter earnings. The taco chain also announced a new "Elevated Combined Solutions" strategy.

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So what

Revenue in the fourth quarter was $146.5 million, and systemwide comparable-store sales grew 2.4% while company-operated comparable-store sales increased 2.1%. Adjusted net income came in at $6.1 million, or $0.15 per share, and adjusted EBITDA was $23.3 million. Del Taco opened 10 restaurants during the quarter, including nine company-operated locations and one franchised restaurant.

Del Taco is preparing to embark upon the "latest iteration" of its "Combined Solutions" strategy, dubbed "Elevated Combined Solutions."

Now what

Elevated Combined Solutions will include "a series of brand catalysts and operational improvements," CEO John Cappasola, Jr. said in a statement. The strategy will also incorporate a new advertising campaign, new products, a new mobile app, and other enhancements focused on hospitality at Del Taco restaurants.

In terms of guidance for 2018, Del Taco expects systemwide same-store sales to grow 2% to 4%, with revenue of $506 million to $516 million, including the impact of new revenue recognition rules regarding franchise advertising contributions and franchise revenue. Adjusted earnings per share for the year should be $0.59 to $0.63, the midpoint of which is $0.01 shy of the $0.62 per share in adjusted profit that analysts were expecting.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.