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Will Soft Traffic Hurt Red Robin's (RRGB) Earnings in Q1?

Zacks Equity Research

Red Robin Gourmet Burgers, Inc. RRGB is scheduled to report first-quarter fiscal 2019 results on May 30, after market close. The company’s earnings have surpassed the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 9.9%.

Q1 Expectations

The Zacks Consensus Estimate for first-quarter earnings is pegged at 48 cents, lower than 69 cents registered in the year-ago quarter. Notably, the company’s earnings estimates remained stable over the past 30 days. In the last reported quarter, Red Robin’s earnings declined 44.9% on a year-over-year basis.

For revenues, the consensus mark is pinned at nearly $409.9 million, implying a 2.8% decline from the prior-year quarter’s reported figure.
    
Let’s delve deeper to find out how the company’s top and bottom line will shape up in the upcoming quarterly release.

Factors at Play

Red Robin’s top line in the quarter to be reported is likely to be impacted by soft same-store sales and decline in dine-in traffic. Weakness at in-line mall locations is an added concern, which in turn, might hurt the company’s overall performance. In April, the company stated that same-store sales decreased 3.6% during the first three periods of the fiscal first quarter. Per Red Robin, same-store sales in the first quarter are likely to be impacted by challenging weather conditions.

These apart, Red Robin has been witnessing rising costs and expenses, which might prove detrimental to the company’s bottom line and margins in first-quarter fiscal 2019. Also, the company is investing heavily in several sales building initiatives like advertising and technical upgrades that will drive costs higher in the quarter. Remodeling and restaurant maintenance add to the already rising expenses.

Red Robin Gourmet Burgers, Inc. Price and EPS Surprise

Red Robin Gourmet Burgers, Inc. Price and EPS Surprise

Red Robin Gourmet Burgers, Inc. price-eps-surprise | Red Robin Gourmet Burgers, Inc. Quote

 

What the Zacks Model Unveils

Our proven model does not conclusively show that Red Robin is likely to beat earnings estimates in first-quarter fiscal 2019. 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. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Red Robin has an Earnings ESP of 0.00% and a Zacks Rank #4, which makes the surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies in the Retail- Wholesale space, which per our model have the right combination of elements to post earnings beat in the upcoming releases:

Five Below, Inc. FIVE has an Earnings ESP of +2.86% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General DG has an Earnings ESP of +2.16% and a Zacks Rank #3.

Costco COST has an Earnings ESP of +2.19% and a Zacks Rank #3.

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Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
Dollar General Corporation (DG) : Free Stock Analysis Report
 
Red Robin Gourmet Burgers, Inc. (RRGB) : Free Stock Analysis Report
 
Five Below, Inc. (FIVE) : Free Stock Analysis Report
 
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