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What Should You Expect from Red Robin (RRGB) in Q1 Earnings?
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Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) is scheduled to report first-quarter 2017 results on May 16, after market close.
Last quarter, Red Robin posted a positive earnings surprise of 20.69%. The company’s earnings surpassed/met the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 7.77%.
Red Robin Gourmet Burgers, Inc. Price and EPS Surprise
Let’s see how things are shaping up for this announcement.
Factors Likely to Influence Q1 Results
Red Robin’s brand revitalization initiatives such as menu innovation, operational improvement and the introduction of a better customer service platform to enhance guest experience continue to drive revenues. Also, the company’s local marketing initiatives and media campaign are expected to attract customers.
The company has rolled out Kitchen Display System, which is linked to table management software. This is expected to result in major sales growth as kitchens can handle higher peak volumes. Moreover, the company’s increased focus on its remodeling initiative is expected to boost its potential as a brand and improve client experience, thereby driving traffic.
Notably, per its fourth-quarter conference call, for the first quarter of 2017, the company expects adjusted earnings per share in the range of 40 cents to 60 cents.
However, as the operating environment has become increasingly challenging, the decline in sales volumes have begun to impact the returns on new restaurant openings. As a result, Red Robin is slowing down its development plan significantly for 2017. This may hurt the top line in the to-be-reported quarter. It also expects first-half 2017 to be challenging.
Moreover, the company has been witnessing rising labor costs, expenses related to initiatives as well as pre-opening and remodeling costs, which might continue to put pressure on margins in the first quarter. Nevertheless, it remains to be seen if the company’s new supply chain management software could provide some relief to this end.
Earnings Whispers
Our proven model does not show that Red Robin is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below.
Zacks ESP: Red Robin has an Earnings ESP of -3.45%. This is because the Most Accurate estimate is 56 cents while the Zacks Consensus Estimate is pegged higher at 58 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Red Robin currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive ESP to predict a surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the broader Retail-Wholesale sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Fred’s, Inc. has an Earnings ESP of +16.67% and a Zacks Rank #3.
Jack in the Box, Inc. (JACK - Free Report) has an Earnings ESP of +1.1% and a Zacks Rank #3.
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What Should You Expect from Red Robin (RRGB) in Q1 Earnings?
Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) is scheduled to report first-quarter 2017 results on May 16, after market close.
Last quarter, Red Robin posted a positive earnings surprise of 20.69%. The company’s earnings surpassed/met the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 7.77%.
Red Robin Gourmet Burgers, Inc. Price and EPS Surprise
Red Robin Gourmet Burgers, Inc. Price and EPS Surprise | Red Robin Gourmet Burgers, Inc. Quote
Let’s see how things are shaping up for this announcement.
Factors Likely to Influence Q1 Results
Red Robin’s brand revitalization initiatives such as menu innovation, operational improvement and the introduction of a better customer service platform to enhance guest experience continue to drive revenues. Also, the company’s local marketing initiatives and media campaign are expected to attract customers.
The company has rolled out Kitchen Display System, which is linked to table management software. This is expected to result in major sales growth as kitchens can handle higher peak volumes. Moreover, the company’s increased focus on its remodeling initiative is expected to boost its potential as a brand and improve client experience, thereby driving traffic.
Notably, per its fourth-quarter conference call, for the first quarter of 2017, the company expects adjusted earnings per share in the range of 40 cents to 60 cents.
However, as the operating environment has become increasingly challenging, the decline in sales volumes have begun to impact the returns on new restaurant openings. As a result, Red Robin is slowing down its development plan significantly for 2017. This may hurt the top line in the to-be-reported quarter. It also expects first-half 2017 to be challenging.
Moreover, the company has been witnessing rising labor costs, expenses related to initiatives as well as pre-opening and remodeling costs, which might continue to put pressure on margins in the first quarter. Nevertheless, it remains to be seen if the company’s new supply chain management software could provide some relief to this end.
Earnings Whispers
Our proven model does not show that Red Robin is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below.
Zacks ESP: Red Robin has an Earnings ESP of -3.45%. This is because the Most Accurate estimate is 56 cents while the Zacks Consensus Estimate is pegged higher at 58 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Red Robin currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive ESP to predict a surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the broader Retail-Wholesale sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +10% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fred’s, Inc. has an Earnings ESP of +16.67% and a Zacks Rank #3.
Jack in the Box, Inc. (JACK - Free Report) has an Earnings ESP of +1.1% and a Zacks Rank #3.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any of these are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>