Why Is Red Robin (RRGB) Up 0.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Red Robin (RRGB). Shares have added about 0.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Red Robin 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 catalysts.
Red Robin Q1 Earnings and Revenues Lag Estimates
Red Robin reported first-quarter fiscal 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. Earnings missed the consensus estimate for the second straight quarter.
Last week's launch of a new Red Robin loyalty program marked a successful step in the company’s strategy to revitalize the brand within the casual dining industry. The company is encouraged by the early progress and is confident that it has just begun tapping into its full potential.
Delving Deeper
In the fiscal first quarter, Red Robin recorded an adjusted loss per share of 80 cents, wider than the Zacks Consensus Estimate of a loss of 41 cents. The company had reported an adjusted loss per share of 25 cents in the prior-year quarter.
Quarterly revenues of $388.5 million missed the consensus mark of $397 million. The top line decreased 7% year over year. The decrease in revenues was primarily due to dismal restaurant revenues.
In the quarter under review, comparable restaurant revenues fell 6.5% year over year. This was caused by the shift away from deep discounting marketing promotions. Also, guest traffic declined 9.4% in the quarter. However, this was partially offset by a 2.9% rise in guest checks. The rise in guest checks was due to a 5.4% increase in menu prices. This was partially offset by a 1.8% decline in the menu mix.
Operating Results
The restaurant-level operating profit margin was 11% in the fiscal first quarter (compared with 14.7% in the prior-year quarter).
In the fiscal first quarter, restaurant labor costs increased 2.4% year over year to $149 million.
Other operating costs in the quarter declined 7.7% year over year to $66.5 million.
Adjusted earnings before interest expenses, income taxes, depreciation and amortization (EBITDA) in the fiscal first quarter amounted to $12.2 million, compared with $35.9 million in the prior-year quarter.
Other Financial Information
As of Apr 21, 2024, Red Robin had cash and cash equivalents of $30.6 million compared with $23.6 million as of Dec 31, 2023. Long-term debt, as of Apr 21, 2024, was $162 million compared with $182.6 million in the prior-year quarter. Inventories in the quarter were $27.1 million compared with $26.8 million in the previous quarter.
2024 Guidance
The company reiterated its fiscal 2024 guidance. For fiscal 2024, the company continues to expect total revenues in the range of $1.25-$1.275 billion. Restaurant-level operating profit is anticipated in the range of 12.5-13.5%. Capital expenditures are anticipated between $25 million and $35 million. In 2024, adjusted EBITDA is expected in the range of $60-$70 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 29.07% due to these changes.
VGM Scores
At this time, Red Robin has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Red Robin has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Red Robin Gourmet Burgers, Inc. (RRGB): Free Stock Analysis Report
