Gestalt Investor
Long/short equity, growth at reasonable price, long-term horizon, hedge fund manager

Fiesta Restaurant Group: Geographic Expansion Fuels Upside Potential

Investment Thesis

In an era of muted economic growth, Fiesta Restaurant Group (NASDAQ:FRGI) is notable for its long-term ability to achieve annual earnings growth and annual sales growth above 20% and 10%, respectively. Fiesta operates two proven, regional restaurant chains that are presently embarking on a multi-year geographic expansion throughout the Southeastern US. With just 270 stores across their two restaurant brands, there is considerable opportunity for upside surprise to Street consensus estimates arising from accelerated unit growth and continued momentum in comparable store sales.

At Fiesta's current market price, I estimate that investors are paying a slight premium to its intrinsic value to enter this promising long-term growth story. The valuation premium is equivalent to pre-paying for

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