A month has gone by since the last earnings report for Red Robin (RRGB - Free Report) . Shares have lost about 52.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Red Robin due for a breakout? 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 drivers.
Red Robin Earnings & Revenues Miss Estimates in Q4
Red Robin Gourmet Burgers, 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.
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.
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.
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.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -234.43% due to these changes.
Currently, Red Robin has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 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.
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 #4 (Sell). We expect a below average return from the stock in the next few months.