Red Robin (RRGB) Stock Up on Q1 Earnings & Revenues Beat

Red Robin Gourmet Burgers, Inc. RRGB reported first-quarter fiscal 2022 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines improved on a year-over-year basis. Following the results, the company’s shares gained 16% in the after-hours trading session on May 26.

Earnings & Revenue Discussion

In the first quarter, Red Robin reported an adjusted loss per share of 12 cents, narrower than the Zacks Consensus Estimate of a loss of 68 cents. In the year-ago quarter, the company reported an adjusted loss of 30 cents.

Quarterly revenues of $395.6 million surpassed the consensus mark of $379 million. The top line increased 21.2% year over year. The upside was primarily driven by favorable guest count, increased menu mix and pricing and discounted offerings.

During the quarter under review, comparable restaurant revenues climbed 19.7% year over year. The upside was primarily driven by a 6.9% rise in guest count and a 12.8% increase in average guest checks. The rise in average guest check can be attributed to a 5.4% increase in pricing, a 6% improvement in menu mix and a 1.4% decline in discounts. Menu mix, during the fiscal first quarter, gained from higher dine-in sales and limited-time menu offerings.

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

The restaurant-level operating profit margin was 14% in the fiscal first quarter compared with 15.7% reported in the prior-year quarter.

During the fiscal first quarter, restaurant labor costs (as a percentage of restaurant revenues) increased 130 bps year over year to 36.3%. The upside was primarily due to labor inflation.

Meanwhile, other operating costs declined 30 bps year over year to 17.8%. During the quarter under review, the cost of sales increased 220 bps year over year to 23.9%. Occupancy costs fell 140 bps year over year to 8%.

Adjusted earnings before interest expenses, income taxes, depreciation and amortization during the fiscal first quarter amounted to $28 million compared with $27.4 million in the year-ago quarter.

Other Financial Information

As of Apr 17, 2022, Red Robin had cash and cash equivalents of $33.8 million compared with $22.8 million as of Dec 26, 2021. Long-term debt as of Apr 17, 2022, stood at $192.4 million compared with $167.3 million as of Dec 26, 2021.

Inventories during the quarter were $25.2 million flat year over year.

Guidance

Red Robin reiterated 2022 guidance. For fiscal 2022, the company continues to expect capital expenditures in the range of $40 million to $50 million. This includes investments related to restaurants, infrastructure and systems capital maintenance, digital guest, operational technology solutions and off-premises execution enhancements.

For fiscal 2022, the company continues to expect selling, general and administrative costs in the range of $145 million to $155 million. Adjusted EBITDA is anticipated between $80 million and $90 million. In 2022, the company anticipates commodity and restaurant labor cost inflation to be in the mid-to-high single digit.

Zacks Rank & Key Picks

Red Robin currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Retail-Wholesale sector are MarineMax, Inc. HZO, BBQ Holdings, Inc. BBQ and Cracker Barrel Old Country Store CBRL.

MarineMax sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 32.8%, on average. Shares of the company have declined 19.1% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for MarineMax’s 2022 sales and EPS suggests growth of 16% and 21.5%, respectively, from the year-ago period’s levels.

BBQ Holdings carries a Zacks Rank #2 (Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have decreased 11.7% in the past year.

The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and EPS suggests growth of 46.1% and 67.6%, respectively, from the year-ago period’s levels.

Cracker Barrel carries a Zacks Rank #2. Cracker Barrel has a long-term earnings growth of 9.4%. Shares of the company have declined 34.8% in the past year.

The Zacks Consensus Estimate for Cracker Barrel’s 2022 sales and EPS suggests growth of 17.3% and 33.5%, respectively, from the year-ago period’s levels.

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