I wouldn't hold this stock going into earnings, it's too much of a gamble. Wait until Thursday morning and get in at $18-19.
New CEO in November. Generally a new CEO likes to come in and clean up the balance sheet usually, resulting in one time expenses. They can blame these expenses on prior management. Sure, he was there in November in time for last quarter's earnings release, but may not have had time in the 45 days before quarter end to get things cleaned up.
Beginning next quarter we'll start to see sequential improvement.
What do you speculate RRGB means by the last sentence in the attached paragraph where they talk about more details to be announced at the time of their quarterly earnings release?
Red Robin Gourmet Addresses Oak Street Capital Management Letter (21.19 ) : "We are in receipt of your letter of January 24, 2011... We disagree with a number of assertions in your letter, but in particular with the suggestion that the Board lacks a sense of urgency with regard to improvements at Red Robin. As you know, we reconstituted our Board with a new group of independent and experienced directors. This new Board, together with Steve Carley, our new CEO, and the Company's senior executive team, immediately undertook the task of evaluating and developing strategic and operational improvements designed to enhance shareholder value. This new strategic initiative, known as Project RED, was initiated in late October 2010, well before Oak Street filed its Schedule 13D, and reflects the strategic, financial and operational priorities of the new Board and management team. As part of our year-end review, in early January we chose to share some highlights of the strategic initiative, while committing to announce further details in connection with our fourth quarter earnings release in mid-February.
I think it'll be the Red Royalty program, that most people already know about. They've been pushing to get people to sign up for that for the past few weeks by offering a free appetiser... probably so they can give tout the number of people signed up already in the conference call.
I also expect them to talk about the shareholder rights / poison pill that they seem to be willing to let expire in May at the annual shareholder's meeting. That is good news.
With rising food prices and no increase in menu prices I expect decreasing margins mentioned in the call today. Wall Street hates that.
My expectation is that RRGB will be bought by private equity by the end of 2011 and I am hoping to get back in RRGB before that happens... idealy at 18 or so (doubtful) but anywhere under 20 is a good price.
Of course, this is just my opinion. Looking at the options action today people were buying up the Feb 22.50 calls today (expiring tomorrow). That's a hell of a bet to make.