Back to top

Analyst Blog

Red Robin Gourmet Burgers Inc. (RRGB - Free Report) reported mixed fourth-quarter 2016 results with earnings beating the Zacks Consensus Estimate while revenues missing the same.

Following the results, Red Robin’s shares were up over 3% in after-hour trading on Feb 21.

Earnings & Revenue Discussion

Red Robin’s adjusted earnings of 35 cents per share surpassed the Zacks Consensus Estimate of 29 cents by 20.7%. However, earnings declined 59.3% year over year owing to weak comps and lower margins.
 

 

Revenues of $291.5 million were below the Zacks Consensus Estimate of $297.5 million by over 2% but grew 1.8% year over year driven by new restaurant openings.

Behind the Headline Numbers

During the quarter, restaurant revenues went up 2% year over year to $287.9 million. Franchise royalties and fee revenues, however, decreased 14% to about $3.5 million.

Company-owned restaurants’ comps declined 4.3% year over year, worse than the prior-quarter comps decline of 3.6%. The decrease was led by a 2.9% decline in traffic and a 1.4% fall in average guest check.

Despite lower cost of sales, restaurant-level operating profit margin decreased 290 basis points (bps) to 19%, due to higher labor and occupancy costs as well as  other restaurant operating expenses.

Also, adjusted earnings before interest, taxes, and amortization (EBITDA) decreased 13.7% to $30.2 million from $35 million in the year-ago quarter.

Red Robin Gourmet Burgers, Inc. Price, Consensus and EPS Surprise

 

Red Robin Gourmet Burgers, Inc. Price, Consensus and EPS Surprise | Red Robin Gourmet Burgers, Inc. Quote

2016 Results

Red Robin’s full-year adjusted earnings of $2.78 surpassed the Zacks Consensus Estimate of $2.72 by 2.2%. However, it decreased 16.3% from the year-ago quarter figure of $3.32.

Full-year revenues of nearly $1.30 billion were almost in line with the Zacks Consensus Estimate. Meanwhile, revenues increased 3.1% year over year.

First-Quarter Guidance

For the first quarter of 2017, the company expects adjusted earnings per share in the range of 40 cents to 60 cents.

Guidance for 2017

For 2017, Red Robin expects adjusted earnings per share in the range of $2.70 to $3.00. The Zacks Consensus Estimate for 2017 earnings is currently pegged at $2.96 per share.

Red Robin expects total revenue growth in 2017 to be between 6% and 8%. This includes comparable restaurant revenue growth in the range of 0.5% to 1.5%. Additioanlly, the growth is expected to be driven by increased operating weeks associated with locations opened in 2016 and 2017, as well as the 53rd week in 2017.

Adjusted EBITDA in 2017 is likely to be in between $145 million and $155 million.

Capital expenditures are expected to be roughly between $85 million and $95 million.

Meanwhile, the company plans to open roughly 17 and close nine Red Robin locations in 2017.

Zacks Rank & Stocks to Consider

Red Robin has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , Potbelly Corporation (PBPB - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) . While Dave & Buster's and Potbelly sport a Zacks Rank #1 (Strong Buy), Darden carries the same Zacks Rank as Papa John’s. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dave & Buster's earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 37.81%. Meanwhile, for fiscal 2017, EPS is expected to improve 35.1%.

The Zacks Consensus Estimate for Potbelly’s 2017 earnings climbed 2.2% over the past 30 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 39.82%.

Darden’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 2.57%. Further, for fiscal 2017, EPS is expected to grow 11.1%.

Zacks' Top Investment Ideas for Long-Term Profit

How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>



Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »