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Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Red Robin Gourmet Burgers, Inc., together with its subsidiaries, develops, operates, and franchises full-service and casual-dining restaurants. With the latest financial year loss of US$276m and a trailing-twelve-month loss of US$59m, the US$329m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Red Robin Gourmet Burgers' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 5 of the American Hospitality analysts is that Red Robin Gourmet Burgers is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$3.9m in 2022. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 62% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Red Robin Gourmet Burgers' growth isn’t the focus of this broad overview, though, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Red Robin Gourmet Burgers is its debt-to-equity ratio of 142%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are too many aspects of Red Robin Gourmet Burgers to cover in one brief article, but the key fundamentals for the company can all be found in one place – Red Robin Gourmet Burgers' company page on Simply Wall St. We've also compiled a list of essential factors you should look at:
Valuation: What is Red Robin Gourmet Burgers worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Red Robin Gourmet Burgers is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Red Robin Gourmet Burgers’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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