Yahoo Finance Why Is Red Robin (RRGB) Up 22.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Red Robin (RRGB). Shares have added about 22.8% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Red Robin Q3 Earnings & Revenues Beat Estimates
Red Robin reported its third-quarter fiscal 2022 results, with both earnings and revenues beating the Zacks Consensus Estimate. The top-line increased year over year, while the bottom line declined on a year over year basis.
Earnings & Revenue Discussion
In the fiscal third quarter, Red Robin reported an adjusted loss per share of $1.03, narrower than the Zacks Consensus Estimate of a loss of $1.30. In the year-ago quarter, the company reported an adjusted loss of 88 cents.
Quarterly revenues of $286.9 million surpassed the consensus mark of $282 million. The top line increased 4.2% year over year. The upside was primarily driven by favorable guest check and increased menu mix and pricing.
During the quarter under review, comparable restaurant revenues rose 5.3% year over year. The upside was primarily driven by a 9% rise in guest check and a 3.7% decrease in average guest count. The rise in average guest check can be attributed to a 7.7% increase in pricing, a 2.5% improvement in menu mix and a 1.2% decline in discounts.
Operating Results
The restaurant-level operating profit margin was 12.6% in the fiscal third quarter compared with the 12.5% reported in the prior-year quarter.
During the fiscal third quarter, restaurant labor costs (as a percentage of restaurant revenues) decreased 130 basis points (bps) year over year to 35.6%. The upside was primarily due to labor inflation.
Meanwhile, other operating costs declined 30 bps year over year to 18.7%. During the quarter under review, cost of sales increased 180 bps year over year to 25%. Occupancy costs fell 20 bps year over year to 8.1%.
Adjusted earnings before interest expenses, income taxes, depreciation and amortization during the fiscal third quarter amounted to $4 million compared with $8.2 million in the year-ago quarter.
Other Financial Information
As of Oct 2, 2022, Red Robin had cash and cash equivalents of $50 million compared with $22.8 million as of Dec 26, 2021. Long-term debt as of Oct 2, 2022, stood at $189.3 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 updated 2022 guidance. For fiscal 2022, the company now expects capital expenditures in the range of $43-$48 million. This includes investments in 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 $138-$142 million compared with the prior estimate of $145-$155 million. Adjusted EBITDA is anticipated between $53 million and $58 million, down from the earlier estimate of $80 million and $90 million. In 2022, the company anticipates pricing in the mid-single digit, cost inflation in the mid-double digits and restaurant labor cost inflation in the mid-to-high single digit.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -64.1% due to these changes.
VGM Scores
Currently, Red Robin has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Red Robin has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Red Robin is part of the Zacks Retail - Restaurants industry. Over the past month, Chipotle Mexican Grill (CMG), a stock from the same industry, has gained 16.8%. The company reported its results for the quarter ended September 2022 more than a month ago.
Chipotle reported revenues of $2.22 billion in the last reported quarter, representing a year-over-year change of +13.7%. EPS of $9.51 for the same period compares with $7.02 a year ago.
Chipotle is expected to post earnings of $8.80 per share for the current quarter, representing a year-over-year change of +57.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +0%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Chipotle. Also, the stock has a VGM Score of C.
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Red Robin Gourmet Burgers, Inc. (RRGB) : Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
