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Bear of the Day: Red Robin (RRGB)

David Bartosiak

With the market up near all-time highs, you may be tempted to load the boat on every stock you see. That may sound like a great idea during a market melt-up but could prove to be very costly. The stock you’re looking at could have a deep, dark secret like a very negative earnings trend. One way to avoid this sort of trap is to lean on the power of the Zacks Rank. Stocks which are Zacks Rank #4 (Sell) and Zacks Rank #5 (Strong Sell) stocks have earnings trends moving in the wrong direction. While that may not grenade a stock in the short-term, it could set investors up for long-term disappointments.

One such stock with an unfavorable Zacks Rank is today’s Bear of the Day, Red Robin Gourmet Burgers (RRGB). Red Robin Gourmet Burgers, Inc., together with its subsidiaries, develops, operates, and franchises full-service and casual-dining restaurants in the United States and Canada. The company's restaurants primarily offer burgers; various appetizers, salads, soups, seafood, and other entrees; and desserts, milkshakes, alcoholic and non-alcoholic specialty drinks, cocktails, wine, and beers. As of December 31, 2018, it operated 484 company-owned restaurants located in 39 states and 2 Canadian provinces; and had 89 casual-dining restaurants operated by franchisees in 16 states.

Not only is Red Robin a Zacks Rank #5 (Strong Sell), it’s also in an industry which ranks in the Bottom 24% of our Zacks Industry Rank. The reason for the unfavorable Zacks Rank lies in the recent earnings estimate revisions to the downside. Over the last sixty days, seven analysts have cut their earnings estimates for the current year, while four have followed suit for next year. The bearish moves have dropped the Zacks Consensus Estimate for the current year from $1.71 to $1.23. Next year’s number has come down from $2.15 to $1.37.

Red Robin Gourmet Burgers, Inc. Price and Consensus

Red Robin Gourmet Burgers, Inc. Price and Consensus | Red Robin Gourmet Burgers, Inc. Quote

Investors looking for other stocks within the Restaurant Industry should check out some of the companies with more favorable Zacks Ranks. Among the many Zacks Rank #2 (Buy) stocks in the industry are Chipotle Mexican Grill (CMG) and Darden Restaurants (DRI).

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Red Robin Gourmet Burgers, Inc. (RRGB) : Free Stock Analysis Report
Darden Restaurants, Inc. (DRI) : Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
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