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Red Robin (RRGB) Q3 Earnings: A Disappointment in Store?
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Red Robin Gourmet Burgers Inc. (RRGB - Free Report) is scheduled to report third-quarter fiscal 2016 results on Nov 2, after the market closes.
Last quarter, Red Robin posted a 5.06% negative earnings surprise. However, before that, the company has surpassed earnings estimates in the three trailing quarters, bringing the average surprise in last four quarters to a positive 6.50%.
Let’s see how things are shaping up for this announcement.
Notably, the company has been witnessing rising costs and expenses since the beginning of 2016 mainly due to higher labor costs. Further, various sales building initiatives, along with pre-opening and remodeling expenses, are adding to the company's expenses. We thus expect the company’s rising costs to put pressure on third-quarter margins as well.
Moreover, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps in the to-be-reported quarter.
Nonetheless, the company’s brand transformation initiatives, unit expansion, and the introduction of a strategic plan to drive sales and lower expenses should somewhat boost the quarterly results.
Earnings Whispers
Our proven model does not conclusively show that Red Robin is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks ESP: Red Robin has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 38 cents.
Zacks Rank: Red Robin has a Zacks Rank #5 (Strong Sell). As it is, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider instead as our model shows they have the right combination of elements to post an earnings beat this quarter:
Fogo de Chao, Inc. has an earnings ESP of +13.33% and a Zacks Rank #3.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an earnings ESP of +7.69% and a Zacks Rank #3.
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Red Robin (RRGB) Q3 Earnings: A Disappointment in Store?
Red Robin Gourmet Burgers Inc. (RRGB - Free Report) is scheduled to report third-quarter fiscal 2016 results on Nov 2, after the market closes.
Last quarter, Red Robin posted a 5.06% negative earnings surprise. However, before that, the company has surpassed earnings estimates in the three trailing quarters, bringing the average surprise in last four quarters to a positive 6.50%.
Let’s see how things are shaping up for this announcement.
RED ROBIN GOURM Price and EPS Surprise
RED ROBIN GOURM Price and EPS Surprise | RED ROBIN GOURM Quote
Factors Likely to Influence this Quarter
Notably, the company has been witnessing rising costs and expenses since the beginning of 2016 mainly due to higher labor costs. Further, various sales building initiatives, along with pre-opening and remodeling expenses, are adding to the company's expenses. We thus expect the company’s rising costs to put pressure on third-quarter margins as well.
Moreover, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps in the to-be-reported quarter.
Nonetheless, the company’s brand transformation initiatives, unit expansion, and the introduction of a strategic plan to drive sales and lower expenses should somewhat boost the quarterly results.
Earnings Whispers
Our proven model does not conclusively show that Red Robin is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks ESP: Red Robin has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 38 cents.
Zacks Rank: Red Robin has a Zacks Rank #5 (Strong Sell). As it is, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider instead as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Wendy's Company (WEN - Free Report) has an earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fogo de Chao, Inc. has an earnings ESP of +13.33% and a Zacks Rank #3.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an earnings ESP of +7.69% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>