"Red Robin said it does not expect a quick economic turnaround in these markets and will continue to see negative impact on its results throughout the rest of the year. For the remainder of 2008, it expects additional food and beverage costs, as well as fuel surcharges above its original projections."
How does a statement like that coincide with raised guidance. Even if they pass on 2.7% of their increased cost, this probably won't cover their true cost increases. Also, they dumped tons of money into advertising last quarter with no great boost in income. Perhaps they will find a formula to turn things around. I doubt it (and so do many others). My only question is whether the stock will sink below resistance of $27.50 or just bounce off that point again in the next couple of weeks.
This stock is a pig and management will probably change in 12 months. They are playing games. YOU CAN NOT raise guidance and miss by $.07 in the same report. They are acquiring future earnings because they can't expand their business successfully internally. The squeeze of higher oil, and food prices for the rest of 2008 can't be good for the next reporting period. Sell them now and wait for new management in 2009. You can make money some place else.
Guidance was raised because they bought sales and EPS. This will deteriorate their balance sheet during a consumer led recession. Also, I would guess the stuff they purchased from franchise owners was stuff the owners were thinking about walking away from.