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Why Is Red Robin (RRGB) Up 7.6% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) . Shares have added about 7.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Red Robin Tops on Q4 Earnings, Lags Sales; Gives View
Red Robin reported mixed Q4 2016 results with earnings beating the Zacks Consensus Estimate, while revenues missing the same.
Earnings & Revenue Discussion
Red Robin’s adjusted earnings of $0.35 per share surpassed the Zacks Consensus Estimate of $0.29 by 20.7%. However, earnings declined 59.3% year over year owing to weak comps and lower margins.
Revenues of $291.5 million came 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.
First-Quarter Guidance
For the first quarter of 2017, the company expects adjusted earnings per share in the range of $0.40 to $0.60.
Guidance for 2017
For 2017, Red Robin expects adjusted earnings per share in the range of $2.70 to $3.00.
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%. Additionally, 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.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 58.6% due to these changes.
Red Robin Gourmet Burgers, Inc. Price and Consensus
At this time, Red Robin's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Red Robin (RRGB) Up 7.6% Since the Last Earnings Report?
It has been about a month since the last earnings report for Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) . Shares have added about 7.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Red Robin Tops on Q4 Earnings, Lags Sales; Gives View
Red Robin reported mixed Q4 2016 results with earnings beating the Zacks Consensus Estimate, while revenues missing the same.
Earnings & Revenue Discussion
Red Robin’s adjusted earnings of $0.35 per share surpassed the Zacks Consensus Estimate of $0.29 by 20.7%. However, earnings declined 59.3% year over year owing to weak comps and lower margins.
Revenues of $291.5 million came 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.
First-Quarter Guidance
For the first quarter of 2017, the company expects adjusted earnings per share in the range of $0.40 to $0.60.
Guidance for 2017
For 2017, Red Robin expects adjusted earnings per share in the range of $2.70 to $3.00.
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%. Additionally, 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.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 58.6% due to these changes.
Red Robin Gourmet Burgers, Inc. Price and Consensus
Red Robin Gourmet Burgers, Inc. Price and Consensus | Red Robin Gourmet Burgers, Inc. Quote
VGM Scores
At this time, Red Robin's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.