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Red Robin (RRBG) Stock Up 45% in 3 Months: More Upside Left?
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Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) is poised to benefit from off-premise sales and digital initiatives. Also, increased focus on cost-saving initiatives and outdoor seating expansion bodes well. Notably, shares of Red Robin have outperformed the industry in the past three months. The stock has gained 45.1% compared with the industry’s 7.9% growth.
Factors Driving Growth
Red Robin continues to focus on off-premise sales to drive growth amid the pandemic. Notably, the company’s off-premise sales have increased sharply compared with the pre-COVID-19 levels. During the second and third quarter of 2020, off-premise sales soared 208.7% and 127.2%, respectively. Off-premise sales comprised 63.8% and 40.7% of total food and beverage sales in second and third-quarter 2020, respectively. Notably, the upside can primarily be attributed to its focus on all off-premise sales channels, carry-out, third-party and Red Robin delivery (or last mile). Also, reductions in menu and refined operating processes resulted in timely pickup and delivery.
Moreover, Red Robin has been investing significantly in technology and data infrastructure. In fact, the company is working with each provider to better integrate into its POS and KDS systems and ease the intricacy in operations teams. Nonetheless, the company’s initiative of moving call-in ordering to a centralized call center is yielding positive results and is thus slowly expanding its reach to ensure quality experience.
Apart from this, the company has increased focus on three areas — revenue growth, expense management and efficient capital deployment — to drive profitability. On the expense front, the company is focusing on a new supply chain management software, replacing its older manual system. This might result in improved control of waste and cost of goods, significantly reducing inventory levels at its restaurants.
With dining rooms reopened, the company has accelerated the implementation of its new hospitality model, TGX or Total Guest Experience, to boost customer experience. Moreover, restaurant operators have initiated the opening and expansion of patios around the perimeter of its restaurants to attract more guests. Notably, the initiative enables the company to increase its seating capacity and serve more guests, while maintaining social-distancing protocols.
Nonetheless, the company stated that it has enough liquidity to survive the coronavirus pandemic for some time. As of Oct 4, 2020, Red Robin had cash and cash equivalent of $27.4 million compared with $26.1 million as on Jul 12, 2020. As of Oct 4, 2020, the company had more than $97 million in total liquidity, including cash and cash equivalents and available borrowing capacity under its revolving line of credit. As of Oct 4, the company’s total debt stands at $206 million compared with $198 million as of Jul 12, 2020. At the end of third-quarter fiscal 2020, the company had a debt-to-capital ratio of 0.6, which indicates that its debt levels are manageable.
Other top-ranked stocks in the same space include Jack in the Box Inc. (JACK - Free Report) , Ruth's Hospitality Group, Inc. and FAT Brands Inc. (FAT - Free Report) , each carrying a Zacks Rank #2.
Jack in the Box has a three-five year earnings per share growth rate of 10.6%.
Ruth's Hospitality and FAT Brands’ earnings for 2021 are expected to surge 264.6% and 127%, respectively.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
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Red Robin (RRBG) Stock Up 45% in 3 Months: More Upside Left?
Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) is poised to benefit from off-premise sales and digital initiatives. Also, increased focus on cost-saving initiatives and outdoor seating expansion bodes well. Notably, shares of Red Robin have outperformed the industry in the past three months. The stock has gained 45.1% compared with the industry’s 7.9% growth.
Factors Driving Growth
Red Robin continues to focus on off-premise sales to drive growth amid the pandemic. Notably, the company’s off-premise sales have increased sharply compared with the pre-COVID-19 levels. During the second and third quarter of 2020, off-premise sales soared 208.7% and 127.2%, respectively. Off-premise sales comprised 63.8% and 40.7% of total food and beverage sales in second and third-quarter 2020, respectively. Notably, the upside can primarily be attributed to its focus on all off-premise sales channels, carry-out, third-party and Red Robin delivery (or last mile). Also, reductions in menu and refined operating processes resulted in timely pickup and delivery.
Moreover, Red Robin has been investing significantly in technology and data infrastructure. In fact, the company is working with each provider to better integrate into its POS and KDS systems and ease the intricacy in operations teams. Nonetheless, the company’s initiative of moving call-in ordering to a centralized call center is yielding positive results and is thus slowly expanding its reach to ensure quality experience.
Apart from this, the company has increased focus on three areas — revenue growth, expense management and efficient capital deployment — to drive profitability. On the expense front, the company is focusing on a new supply chain management software, replacing its older manual system. This might result in improved control of waste and cost of goods, significantly reducing inventory levels at its restaurants.
With dining rooms reopened, the company has accelerated the implementation of its new hospitality model, TGX or Total Guest Experience, to boost customer experience. Moreover, restaurant operators have initiated the opening and expansion of patios around the perimeter of its restaurants to attract more guests. Notably, the initiative enables the company to increase its seating capacity and serve more guests, while maintaining social-distancing protocols.
Nonetheless, the company stated that it has enough liquidity to survive the coronavirus pandemic for some time. As of Oct 4, 2020, Red Robin had cash and cash equivalent of $27.4 million compared with $26.1 million as on Jul 12, 2020. As of Oct 4, 2020, the company had more than $97 million in total liquidity, including cash and cash equivalents and available borrowing capacity under its revolving line of credit. As of Oct 4, the company’s total debt stands at $206 million compared with $198 million as of Jul 12, 2020. At the end of third-quarter fiscal 2020, the company had a debt-to-capital ratio of 0.6, which indicates that its debt levels are manageable.
Zacks Rank & Other Key Picks
Red Robin currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks in the same space include Jack in the Box Inc. (JACK - Free Report) , Ruth's Hospitality Group, Inc. and FAT Brands Inc. (FAT - Free Report) , each carrying a Zacks Rank #2.
Jack in the Box has a three-five year earnings per share growth rate of 10.6%.
Ruth's Hospitality and FAT Brands’ earnings for 2021 are expected to surge 264.6% and 127%, respectively.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>