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Red Robin Posts Smaller-Than-Expected Quarterly Loss; Revenue Beat Estimates

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Red Robin Gourmet (RRGB) reported a smaller-than-expected loss in the first quarter. Furthermore, revenue outpaced analysts’ expectations of $310.4 million.

Following the announcement, shares of the dining restaurant company rose 3.6% in Tuesday’s extended trading session after closing 6.5% lower on the day.

The company incurred a loss of $0.30 per share in 1Q, compared to the $1.16 loss per share estimated by analysts. A loss of $6.66 per share was reported in the same quarter last year.

Total revenue generated in the quarter was $326.3 million which grew 6.6% from the year-ago period.

Red Robin CEO Paul J. B. Murphy III said, “We believe the foundation that we have put in place will drive Guest activation, deliver a great brand experience, continue to generate incremental off-premises sales, and leverage our strengthened business model, together creating long-term value for our shareholders.” (See Red Robin stock analysis on TipRanks)

Following the Q1 earnings release, Raymond James analyst Brian Vaccaro maintained a Buy rating and a price target of $50 (47.7% upside potential).

Vaccaro commented, “Though still lagging broader industry trends (West Coast footprint), we believe sales have improved significantly since mid-March, with room for additional improvement as dining room restrictions/COVID concerns ease, especially in California, Washington, and Oregon.”

The analyst further added, “Combined with ~$30M cost savings realized during COVID, we expect significant EBITDA improvement beginning in 2Q21. While tight labor market conditions are a near term challenge (optimistic can loosen as enhanced unemployment benefits expire), we expect the company’s food cost outlook to be up only slightly vs. prior expectations.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 2 Buys, 1 Hold, and 1 Sell. The average analyst price target of $36 implies 6.35% upside potential to current levels. Shares have increased 63.45% over the past six months.

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Red Robin Gourmet is currently Neutral, with 2 hedge funds decreasing their cumulative holdings of the stock by 194,700 shares in the last quarter.

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