Wells Fargo Starts Del Frisco's Restaurant (DFRG) at Outperform; There's No Guilt By Association Here

Wells Fargo initiates coverage on Del Frisco's Restaurant (NASDAQ: DFRG) with an Outperform. PT range $15-$16.

Analyst, Jeff Farmer, said, "From 2004 to 2006, McCormick & Schmicks, Ruth’s Hospitality (Nasdaq: RUTH) and Morton’s Restaurant Group all went public with highly leveraged balance sheets while simultaneously pointing to several years of at least 10% unit growth. Consumer as well as company-specific headwinds emerged and all three saw same-store sales (SSS) decline, margins compress, unit growth come to a stop and market capitalizations cut in half. We urge investors to avoid guilt by association given: 1) DFRG has virtually no debt, 2) the company’s high average unit volume (AUV) concepts and lean corporate overhead drive one of the highest EBIT margins (14%+ over TTM) in the restaurant sector, and 3) DFRG, with just 32 units in operation, is in a much earlier unit development lifecycle stage than was the peer group at the time of their respective IPOs."

For an analyst ratings summary and ratings history on Del Frisco's Restaurant click here. For more ratings news on Del Frisco's Restaurant click here.

Shares of Del Frisco's Restaurant closed at $12.56 yesterday.

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