Red Robin Gourmet Burgers (RRGB)
dined at a couple Red
Robins in my day and had no idea they were a public company until about
ago. You’d think after ranking as the #1
Best Burger (chain stores) 3 years in a row from Zagat; they would be
radar being that I’m a connoisseur of fine ground beef in a bun and a
listening to their commercial
about 20 times I had their chime in my head, but it was a random trip
Garland Texas that first introduced me to one of the 462 restaurants in the
chain. It was worth the trip if you like burgers and
surface, my biggest complaint would be obviously be visibility, unlike
competitors like Chipotle Mexican grill, which seems to be everywhere
(physically and in financial circles), Red Robin is a bit harder to
find. Red Robin does have diversity in its
offerings with everything from ribs to shrimp tacos to fish and chips,
add to its attraction.
you compare the two, Chipotle (CMG - Analyst Report)
is currently trading at more than 50 times
forward earnings, while Red Robin is at about 19 times.
Perhaps there is still some value in this
unique burger chain.
Red Robin currently operates more than 460 restaurants across the
and Canada. The company is also expanding through its franchise
Currently, the restaurant chain is 70% company operated and 30%
The company expects to roll
out 13 to 15 restaurants in 2012, including both full-sized restaurants
smaller prototype units. Small-size restaurants will likely drive
non-traditional locations and also improve return on invested capital.
Robin’s units are mostly located in California, Colorado, North
Virginia, and Washington. The company expects to open around 50% of its
targeted restaurants in 2012 in these states. While the company seems
comfortable expanding in familiar ground, we also foresee management
in relatively new markets to avoid market saturation.
Red Robin targets new unit investment/development
to be in the range of $50–$60 million in 2012t. It also plans to
investments in equipment and store remodeling.
RRGB is a small-cap (526 million) company that is trading at about 19
forward (expectations for next quarter) earnings. RRGB
recently became a Zacks Rank 1 strong buy
on April 4th.
2011 sales increased 7% compared to full year 2010; earnings increased
$0.46 in FY2010 to $1.34 in FY2011, over 290%!
They are expected to earn $1.54 for the full year (FY2012) according to
the Zacks Consensus Estimate.
Of the 9 analysts who cover Red
Robin, the consensus is for the company to grow earnings by 21.4% in
current year (FY2012) and roughly 16.5% in FY2013. RRGB has
analysts’ expectations to the upside 4 quarters in a row; their average
was a positive 54.38% over the last year.
In terms of the magnitude of
analyst estimate trends, we are seeing all of the consensus estimates
they were9 days ago for the current and next quarter as well as FY2012
FY2013. RRGB is expected to earn 67
cents when they report on May 17th.
Performance & Technicals
Red Robin’s stock price has been in a clean, strong bullish channel
of 2011. In that time shares have gained
81%, hitting a high of about $38. Recently
shares have pulled back slightly, but still remain in an overall
comes around the $35 level, then below that more support will come at
day moving average of $34.68. The 200
day moving average stands quite a bit lower at $30.70, which also can
as support and a key level in the current trend.
caution with RRGB as volume is on the low side, trading an average of
200,000 shares daily.
has outperformed the S&P 500’s performance over the past year
by more than
25%. It outpaced it by over 14% in the past
3 months, but has become more correlated in the last month only ahead
index by 1.5%.
the prospects and performance may be good for this stock, the low
volume and sensitivity
to consumer trends could make it a bit more volatile.
A Levy is the Momentum Stock Strategist for Zacks.com. He is also the
charge of the market-beating Zacks
Whisper Trader Service.