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Why Is Red Robin (RRGB) Up 11.9% Since Its 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 11.9% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is RRGB 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 drivers.
Red Robin’s Q4 Earnings & Revenues Beat Estimates
Earnings & Revenue Discussion
Red Robin’s adjusted earnings of 78 cents per share surpassed the Zacks Consensus Estimate of 55 cents by 41.8% and jumped a significant 122.9% year over year.
Revenues of $342.4 million beat the Zacks Consensus Estimate of $331 million by more than 3.4% and increased 17.5% from the prior-year quarter. This improvement was driven primarily by new restaurant openings.
Behind the Headline Numbers
Comps at company-owned restaurants increased 2.7% year over year, against the prior-quarter comps decrease of 0.1%. The upside was led by 0.8% growth in average guest check and 1.9% increase in guest counts. Notably, the increase in average guest check comprised a 2.6% increase in pricing, partly offset by 1.8% drop in menu mix. Red Robin outperformed the casual dining industry on guest traffic for the sixth consecutive quarter.
Restaurant-level operating profit margin expanded 70 basis points (bps) to 20.5% due to a 100-bps decrease in labor costs, 50-bps drop in other restaurant operating expenses and 20-bps fall in occupancy costs. The improvement was partly offset by a 90-bps increase in cost of sales.
Adjusted earnings before interest, taxes, and amortization (EBITDA) increased 22.8% to $35.8 million from $29.2 million in the year-ago quarter.
2017 Highlights
Revenues came in at $1.4 billion, up 6.5% from 2016 level. Company-owned restaurants comps grew 0.6% and comparable-restaurant guest counts increased 0.4%.
However, adjusted earnings declined to $2.49 per share from $2.78 a year ago.
Financial Highlights
Red Robin had cash and cash equivalents of $17.7 million as of Dec 31, 2017, compared with $11.7 million as of Dec 25, 2016. The company’s long-term debt amounted to $266.4 million as of Dec 31, 2017, against $336.4 million at the end of 2016 (as of Dec 25, 2016).
First-Quarter 2018 View
Earnings per share are estimated between 60 cents and 80 cents. This reflects the loss of one high volume revenue week as compared with a year ago. Meanwhile, the Zacks Consensus Estimate of $1.12 is much higher than the guided range.
2018 View
Red Robin anticipates earnings in the band of $2.40-$2.80 per share, reflecting 14-33% year over year growth (after adjusting 2017 for the 53rd week). The Zacks Consensus Estimate for 2018 is pegged at $2.72.
Red Robin projects comparable-restaurant sales growth of 50-150 bps. Operating weeks are expected to decline 1% as 2018 will have 52 weeks compared with 53 weeks in 2017. Total revenues are expected between a decline of 50 bps and an increase of 50 bps in 2018.
Cost of sales, as a percentage of restaurant revenues, is projected to be up 50-100 bps.
Restaurant labor costs, as a percentage of restaurant revenues, are expected to range between an increase of 25 bps and a decrease of 25 bps.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. In the past month, the consensus estimate has shifted by 35.1% due to these changes.
Red Robin Gourmet Burgers, Inc. Price and Consensus
At this time, RRGB has a great Growth Score of A, though it is lagging a lot on the momentum front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 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.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, RRGB has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Red Robin (RRGB) Up 11.9% Since Its 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 11.9% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is RRGB 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 drivers.
Red Robin’s Q4 Earnings & Revenues Beat Estimates
Earnings & Revenue Discussion
Red Robin’s adjusted earnings of 78 cents per share surpassed the Zacks Consensus Estimate of 55 cents by 41.8% and jumped a significant 122.9% year over year.
Revenues of $342.4 million beat the Zacks Consensus Estimate of $331 million by more than 3.4% and increased 17.5% from the prior-year quarter. This improvement was driven primarily by new restaurant openings.
Behind the Headline Numbers
Comps at company-owned restaurants increased 2.7% year over year, against the prior-quarter comps decrease of 0.1%. The upside was led by 0.8% growth in average guest check and 1.9% increase in guest counts. Notably, the increase in average guest check comprised a 2.6% increase in pricing, partly offset by 1.8% drop in menu mix. Red Robin outperformed the casual dining industry on guest traffic for the sixth consecutive quarter.
Restaurant-level operating profit margin expanded 70 basis points (bps) to 20.5% due to a 100-bps decrease in labor costs, 50-bps drop in other restaurant operating expenses and 20-bps fall in occupancy costs. The improvement was partly offset by a 90-bps increase in cost of sales.
Adjusted earnings before interest, taxes, and amortization (EBITDA) increased 22.8% to $35.8 million from $29.2 million in the year-ago quarter.
2017 Highlights
Revenues came in at $1.4 billion, up 6.5% from 2016 level. Company-owned restaurants comps grew 0.6% and comparable-restaurant guest counts increased 0.4%.
However, adjusted earnings declined to $2.49 per share from $2.78 a year ago.
Financial Highlights
Red Robin had cash and cash equivalents of $17.7 million as of Dec 31, 2017, compared with $11.7 million as of Dec 25, 2016. The company’s long-term debt amounted to $266.4 million as of Dec 31, 2017, against $336.4 million at the end of 2016 (as of Dec 25, 2016).
First-Quarter 2018 View
Earnings per share are estimated between 60 cents and 80 cents. This reflects the loss of one high volume revenue week as compared with a year ago. Meanwhile, the Zacks Consensus Estimate of $1.12 is much higher than the guided range.
2018 View
Red Robin anticipates earnings in the band of $2.40-$2.80 per share, reflecting 14-33% year over year growth (after adjusting 2017 for the 53rd week). The Zacks Consensus Estimate for 2018 is pegged at $2.72.
Red Robin projects comparable-restaurant sales growth of 50-150 bps. Operating weeks are expected to decline 1% as 2018 will have 52 weeks compared with 53 weeks in 2017. Total revenues are expected between a decline of 50 bps and an increase of 50 bps in 2018.
Cost of sales, as a percentage of restaurant revenues, is projected to be up 50-100 bps.
Restaurant labor costs, as a percentage of restaurant revenues, are expected to range between an increase of 25 bps and a decrease of 25 bps.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. In the past month, the consensus estimate has shifted by 35.1% 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, RRGB has a great Growth Score of A, though it is lagging a lot on the momentum front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 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.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, RRGB has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.