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Tale of the Tape

Ananya Sarkar

Red Robin (RRGB) Tops Q4 Earnings, Misses Revenues
February 12, 2016

RRGB

Trades from $3

Red Robin Gourmet Burgers Inc. (RRGB - Free Report) operates, and franchises casual-dining and fast-casual restaurants in the United States and Canada.

In the past few quarters, Red Robin has been consistently delivering comps growth and outperforming its competitive set in the industry, according to Black Box. Comps have been continuously strong - driven by the brand transformation initiatives, prudent menu presentation and the rollout of Ziosk tabletop tablets.

Red Robin’s loyalty program — Red Robin Royalty — continues to add new members and has been boosting traffic. Additionally, the company’s new service methods, and innovative menu items have continued to add to revenue growth.

Investors should also note the recent earnings estimate revisions for RRGB, as the consensus estimate has remained mostly stable over the last 30 days. Meanwhile, RRGB has a decent history in the earnings season. Red Robin has delivered positive earnings surprise in three of the four quarters and has an average positive surprise of 8.18%. However, the company has posted negative revenue surprises in three of the trailing four quarters.

Currently, RRGB has a Zacks Rank #3 (Hold), but that could change following Red Robin’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: RRGB beat on earnings. Our consensus earnings estimate called for earnings of 81 cents per share, and the company reported EPS of 86 cents. Investors should note that these figures take out stock option expenses.

Revenues: RRGB reported revenues of $286.3 million. This missed our consensus estimate of $292 million.

Key Stats to Note: Comparable restaurant revenue increased 2.1% in the fourth quarter, aided by 2.5% increase in average guest check, offset by a 0.4% decrease in traffic. However, on a constant currency basis, comps declined 2.0%.

Restaurant-level operating profit margin was 21.9% in the fourth quarter of 2015, up 60 basis points (bps) year over year.

Meanwhile, the company expects total revenues to grow in the range of 8.5% and 9.5% in 2016, aided by comps growth in the low single digits.

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