Canaccord On Del Frisco's: Attractive Valuation Countered By Troubles With The Top-Line, Q3 Comps

Canaccord Genuity thinks Del Frisco's Restaurant Group Inc DFRG shares offered attractive valuation. However, analysts remained on the sidelines citing the lack of visibility for top line.

The brokerage initiated the stock with a Hold rating and a price target of $16 pointing out balanced risk/reward.

The company's EPS came in above the expectations in the last two quarters whereas in the preceding two quarters, it was in line with the estimates.

The lead analyst listed six positives and negatives in his research note to clients, "(1) Double Eagle is one of the premier steakhouses in the U.S.; (2) beef prices are currently deflationary and DFRG is non-contracted; (3) improving Grille performance, offset by (4) continued challenges in the Houston and Denver markets (albeit less headwind beginning in Q3); (5) weak international travel to the U.S. given strong dollar and uncertain environment; and (6) QTD SSS softness to start Q3 (down low-single-digits)."

The brokerage indicated its target price offered 5 percent upside. The price target was reached based on 7X its 2017 EBITDA projection of $516 million.

Shares of the company traded down by $0.01, or 0.07 percent, to $15.21.