A month has gone by since the last earnings report for Red Robin (RRGB Quick QuoteRRGB - Free Report) . Shares have added about 2.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Red Robin due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Red Robin Q4 Earnings Miss, Revenues Beat Estimates

Red Robin reported mixed fourth-quarter fiscal 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top and the bottom line increased on a year-over-year basis.

The company cited concerns regarding the anticipated reduction in restaurant sales and adjusted EBITDA in 2024 due to the shift back to a 52-week fiscal year and the impact of sale-leaseback transactions on rent expenses.

Delving Deeper

In the fiscal fourth quarter, Red Robin recorded an adjusted loss per share of 66 cents, wider than the Zacks Consensus Estimate of a loss of 43 cents. The company reported an adjusted loss per share of $1.38 in the prior-year quarter.

Quarterly revenues of $309 million beat the consensus mark of $305 million. The top line increased 6.7% year over year. The rise in revenue was primarily driven by an extra operating week (within the fourth quarter), which constituted the 53rd week of the fiscal year. This additional week contributed approximately $24.5 million to restaurant revenues.

During the quarter under review, comparable restaurant revenues fell 2.7% year over year. The downside can be attributed to the shift away from deep discounting marketing promotions. Also, the Guest count declined 7.6% during the quarter. However, this was partially offset by a 4.9% rise in guest checks. The rise in guest checks can be attributed to a 6.3% increase in menu prices and a 1% increase in discounts. This was partially offset by a 2.4% decline in the menu mix. Per our model, comparable restaurant revenues were anticipated to decline 0.5% year over year.

Operating Results

The restaurant-level operating profit margin was 12.2% in the fiscal fourth quarter (compared with 11.3% reported in the prior-year quarter). The figure compares to our projection of 14.7%.

During the fiscal fourth quarter, restaurant labor costs increased 14.4% year over year to $114.7 million. The figure compares to our projection of $100.3 million.

Other operating costs during the quarter declined 2.4% year over year to $50.8 million. The figure compares to our projection of $54 million.

Adjusted earnings before interest expenses, income taxes, depreciation and amortization (EBITDA) during the fiscal fourth quarter amounted to $10.6 million (compared with $8.4 million reported in the prior-year quarter). Our estimate for the metric was $16.5 million.

Other Financial Information

As of Dec 1, 2023, Red Robin had cash and cash equivalents of $23.6 million compared with $48.8 million as of Dec 25, 2022. Long-term debt as of Dec 31, 2023, was $182.6 million compared with $203.2 million in the prior-year quarter. Inventories during the quarter were $26.8 million compared with $26.4 million reported in the previous quarter.

2023 Highlights

Total revenues in the fiscal 2023 amounted to $1.3 billion compared with $1.27 billion in fiscal 2022.

Adjusted EBITDA in the fiscal 2023 came in at $68.9 million compared with $51.7 million reported in fiscal 2022.

In the fiscal 2023, adjusted loss per share came in at $1.44 compared with $3.32 reported in the previous year.

2024 Guidance

For the fiscal 2024, the company expects total revenues in the range of $1.25-$1.28 billion. Restaurant-level operating profit is anticipated to be in the range of 12.5-13.5%. Capital expenditures are anticipated to be between $25 million and $35 million. In 2024, adjusted EBITDA is expected in the range of $60-$70 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -176.56% due to these changes.

VGM Scores

Currently, Red Robin has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Red Robin has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Red Robin belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, Domino's Pizza (DPZ Quick QuoteDPZ - Free Report) , has gained 10.8% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.

Domino's Pizza reported revenues of $1.4 billion in the last reported quarter, representing a year-over-year change of +0.8%. EPS of $4.48 for the same period compares with $4.43 a year ago.

Domino's Pizza is expected to post earnings of $3.46 per share for the current quarter, representing a year-over-year change of +18.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.7%.

Domino's Pizza has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.