Red Robin Gourmet Burgers ($RRGB) is set to report its fourth quarter financial results before the bell Friday morning. (2/12). The Colorado based casual dining restaurant chain has beat earnings estimates 3 out of the 4 last quarters, with an average beat of 8.18%. Given the latest efforts of prudent menu presentations, the roll out of Kiosk tabletop tablets, added members to the loyalty program, and innovative promotions, Red Robin is expected to have experienced both increased traffic and sales in the last quarter. Investors and analysts are looking to see if these efforts can overshadow Red Robin’s rising cost and expenses. Increased labor cost in addition to increased food costs, are likely to have caused some headwinds for the company. Wall Street is anticipating Red Robin ($RRGB) to announce earnings of 76 cents per share and revenue of $ 295.03 million for the quarter.
The SprinkleBit Analyzer is a great tool you get access to through SprinkleBit’s premium subscription. By populating the analyzer with Red Robin’s main competitors in the casual dining and fast-food industry, we can project how its financial fundamentals compare to its peers. For this analysis, we used PE to compare ($RRGB) against DinEquity ($DIN), Jack in The Box ($JACK), Domino’s Pizza ($DPZ), and YUM Brands ($YUM). By running the fundamental measures in comparison to these companies we received an implied share price of $ 69.59. With the end of day trading price of $ 58.80 (2/12) Red Robin ($RRGB) is undervalued with 18.36%.
We analyzed the daily chart in order to see where the stock price potentially could move to on the release of the earnings report. With an entry price of $57.96 and a reported loss on earnings, the stock has the potential to fall to $ 52, for a 10,28% loss. With an entry price of $57.69 and a reported beat on earnings, the stock has the potential to rise to $66, for a 13.87% gain. The risk/reward ratio for this trade is 1.35.
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