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Why Is Red Robin (RRGB) Down 11.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Red Robin (RRGB - Free Report) . Shares have lost about 11.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Red Robin Q1 Earnings Beat Estimates, Increase Y/Y
Red Robin reported first-quarter fiscal 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Moreover, the top and the bottom line increased on a year-over-year basis. Following the results, shares of the company moved up 3.4% during after-hours trading session on May 25.
The company reported adjusted loss per share of 30 cents in the quarter under review, narrower than the Zacks Consensus Estimate of a loss of $1.24. In the year-ago quarter, the company had reported adjusted loss of $6.66.
Revenue Discussion
Quarterly revenues of $326.3 million beat the consensus mark of $309 million by 5.6%. Moreover, the top line increased 6.6% year over year. Notably, reopening of all indoor dining rooms coupled with pent-up demand for dining benefitted the company.
During the quarter, comparable restaurant revenues increased 10% year over year. The upside was primarily driven by 4.4% rise in guest count and 5.6% increase in average guest check. Increase in average guest check can be attributed to 3.7% rise in pricing, 1.3% rise in menu mix and 0.6% rise from lower discounts. Menu mix, during the quarter, benefitted from higher sales of appetizers and Gourmet burgers, partially offset by lower beverage mix.
Operating Results
Restaurant-level operating profit margin came in at 15.7% for the fiscal first quarter compared with 8.8% in the year-ago quarter.
Restaurant labor costs (as a percentage of restaurant revenue) declined 430 basis points (bps) year over year to 35% in the fiscal first quarter. The downside was primarily caused by efficient management of labor structure, staffing shortages and simplifying menu that lead to reduced kitchen labor hours. However, this was partially offset by higher wage rates.
However, other operating costs increased 80 bps year over year to 18.1%. The upside was mainly owing to a rise in third party delivery commissions and supply costs owing to high off-premises sales.
Cost of sales declined 170 bps year over year to 21.7%. Occupancy costs declined 180 bps year over year to 9.4%. The decrease was primarily driven by savings from permanently closed restaurants, restructuring of lease payments and rent concessions.
Adjusted earnings before interest, taxes and amortization during the fiscal first quarter came in at $27.4 million against a loss of $10.7 million reported in the year-ago quarter.
Other Financial Information
As of Apr 18, 2021, the company had cash and cash equivalents of $22.3 million compared with $16.1 million at the end of Dec 27, 2020. Inventories during the quarter came in at $23.7 million compared with $23.8 million as of December-end. Long-term debt as of Apr 18, 2021 stood at $154.5 million compared with $161 million as on Dec 27, 2020.
Guidance
For 2021, the company expects capital expenditures in the range of $45-$55 million. Notably, this includes investments in regards to restaurants, infrastructure and systems capital maintenance, digital guest, operational technology solutions and off-premises execution enhancements.
Moreover, the company announced Donatos expansion to approximately 120 restaurants in 2021. The company anticipates to open approximately 40 restaurants in the fiscal second quarter and approximately 80 restaurants in the second half of fiscal 2021.
Meanwhile, effective tax rate for 2021 is anticipated between 1% and 5%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 144.68% due to these changes.
VGM Scores
Currently, Red Robin has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second 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 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.
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Why Is Red Robin (RRGB) Down 11.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Red Robin (RRGB - Free Report) . Shares have lost about 11.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Red Robin Q1 Earnings Beat Estimates, Increase Y/Y
Red Robin reported first-quarter fiscal 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Moreover, the top and the bottom line increased on a year-over-year basis. Following the results, shares of the company moved up 3.4% during after-hours trading session on May 25.
The company reported adjusted loss per share of 30 cents in the quarter under review, narrower than the Zacks Consensus Estimate of a loss of $1.24. In the year-ago quarter, the company had reported adjusted loss of $6.66.
Revenue Discussion
Quarterly revenues of $326.3 million beat the consensus mark of $309 million by 5.6%. Moreover, the top line increased 6.6% year over year. Notably, reopening of all indoor dining rooms coupled with pent-up demand for dining benefitted the company.
During the quarter, comparable restaurant revenues increased 10% year over year. The upside was primarily driven by 4.4% rise in guest count and 5.6% increase in average guest check. Increase in average guest check can be attributed to 3.7% rise in pricing, 1.3% rise in menu mix and 0.6% rise from lower discounts. Menu mix, during the quarter, benefitted from higher sales of appetizers and Gourmet burgers, partially offset by lower beverage mix.
Operating Results
Restaurant-level operating profit margin came in at 15.7% for the fiscal first quarter compared with 8.8% in the year-ago quarter.
Restaurant labor costs (as a percentage of restaurant revenue) declined 430 basis points (bps) year over year to 35% in the fiscal first quarter. The downside was primarily caused by efficient management of labor structure, staffing shortages and simplifying menu that lead to reduced kitchen labor hours. However, this was partially offset by higher wage rates.
However, other operating costs increased 80 bps year over year to 18.1%. The upside was mainly owing to a rise in third party delivery commissions and supply costs owing to high off-premises sales.
Cost of sales declined 170 bps year over year to 21.7%. Occupancy costs declined 180 bps year over year to 9.4%. The decrease was primarily driven by savings from permanently closed restaurants, restructuring of lease payments and rent concessions.
Adjusted earnings before interest, taxes and amortization during the fiscal first quarter came in at $27.4 million against a loss of $10.7 million reported in the year-ago quarter.
Other Financial Information
As of Apr 18, 2021, the company had cash and cash equivalents of $22.3 million compared with $16.1 million at the end of Dec 27, 2020. Inventories during the quarter came in at $23.7 million compared with $23.8 million as of December-end. Long-term debt as of Apr 18, 2021 stood at $154.5 million compared with $161 million as on Dec 27, 2020.
Guidance
For 2021, the company expects capital expenditures in the range of $45-$55 million. Notably, this includes investments in regards to restaurants, infrastructure and systems capital maintenance, digital guest, operational technology solutions and off-premises execution enhancements.
Moreover, the company announced Donatos expansion to approximately 120 restaurants in 2021. The company anticipates to open approximately 40 restaurants in the fiscal second quarter and approximately 80 restaurants in the second half of fiscal 2021.
Meanwhile, effective tax rate for 2021 is anticipated between 1% and 5%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 144.68% due to these changes.
VGM Scores
Currently, Red Robin has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second 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 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.