Del Frisco’s (DFRG) reported positive comparable restaurant sales during Q4. The numbers showed weaker trends in November than October but accelerated in December and carried over into 2019 across all four brands While management’s decision-making process has been a bigger concern for the stock, the brands are healthy and the stock is trading at a significant discount to what I perceive the value of the brands to be.
The activist’s playbook on Del Frisco’s (DFRG) should focus more on stronger capital allocation to concentrate on eliminating the massive economic risk inherent in the company’s financials. I agree that the stock is intrinsically undervalued.
Over sum-of-the-parts analysis suggest buying the stock today in the $6-$7 range and you are getting Del Frisco’s Double Eagle for free. The Double Eagle is a highly prized asset in the restaurant space with strong margins and some growth potential.
I think DFRG stock has the potential to double over the next 12-18 months.