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Red Robin (RRGB) Earnings & Revenues Miss Estimates in Q4

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Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) reported unimpressive fourth-quarter fiscal 2019 results, with the top and the bottom line missing the Zacks Consensus Estimate. Decline in traffic and soft restaurant revenues have hurt the quarterly results.

The company reported loss per share of 36 cents, wider than the Zacks Consensus Estimate of a loss of 29 cents. In the year-ago quarter, the company had reported adjusted earnings of 43 cents.

Revenue Discussion

Revenues came in at $302.95 million, which missed the Zacks Consensus Estimate of $303 million and fell 1.3% from the prior-year quarter’s tally. The downside was caused by decline in restaurant revenues.

Comparable restaurant revenues inched up 1.3% year over year (on a constant-currency basis), driven by a 4.7% gain in average check and partially offset by a 3.4% decline in guest count. The increase in average guest check can be attributed to a 1.1% rise in menu mix, 1.8% hike in pricing and a 1.8% increase from lower discounting.

Notably, the increase in menu mix was primarily due to its current menu and promotional strategy.

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. price-consensus-eps-surprise-chart | Red Robin Gourmet Burgers, Inc. Quote

 

Operating Results

Restaurant-level operating profit margin contracted 50 basis points (bps) to 18.9%. The decline was caused by an increase in wage rates and higher levels of staffing at the restaurant manager level. Other restaurant operating costs increased 110 bps primarily due to an increase in third-party delivery fees driven by higher off-premise sales volume as well as increased restaurant technology costs compared with favorable adjustment in the prior-year quarter.

Cost of sales margin declined 60 bps, while occupancy costs inclined 20 bps due to higher general liability costs, partially offset by lower rent expenses stemming from restaurant closures.

Adjusted earnings before interest, taxes and amortization declined to $26.7 million from $28.4 million in the year-ago quarter.

2019 Highlights

In 2019, total revenues amounted to $1,315 million compared with $1,338.6 million in 2018.

Adjusted earnings per share (EPS) for the year ended on Dec 29, 2019 were 62 cents compared with $1.73 on Dec 30, 2018.

Adjusted EBITDA was $101.3 million compared with $123.8 million in 2018.

2020 Guidance

Net income is expected to be at least $2 million, which includes a tax benefit of $10-$12 million.

Adjusted EBITDA is expected to be flat compared with approximately $101 million in 2019.

Capital expenditures are expected in the range of $50-$60 million.

Comparable restaurant revenue growth for 2020 is expected in the lower single digits.

Zacks Rank & Key Picks

Red Robin currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.

Few better-ranked stocks in the same space are Texas Roadhouse, Inc. (TXRH - Free Report) , Brinker International, Inc. (EAT - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) . Texas Roadhouse sports a Zacks Rank #1, while  Brinker International and Chipotle Mexican Grill carry a Zacks Rank #2 (Buy).

Texas Roadhouse has trailing four-quarter positive earnings surprise of 4.3%, on average. The company’s earnings beat estimates in three of the last four quarters.

2020 earnings for Brinker International is expected to rise 10.2%.

Chipotle Mexican Grill has an expected three-five year EPS growth rate of 19.3%.

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