Red Robin Gourmet Burgers ( NASDAQ: RRGB ) stock surged on Wednesday despite a miss on Q4 earnings expectations.
For the quarter reported on Tuesday evening, the Colorado-based burger chain posted a $1.35 per share loss, far wider than the $0.62 loss anticipated by analysts. A 2.4% jump in revenue to $290.1M also came up $3.05M short of expectations. Comparable sales rose 2.5% for the quarter.
Despite the lackluster Q4 print, CEO GJ Hart remained upbeat about the company’s position.
“I am incredibly optimistic about Red Robin’s future and confident the investments we are making will resonate with Guests and drive value for our shareholders,” he said. “We are moving aggressively to capture the opportunities in front of us, and are encouraged with very strong comparable restaurant sales through the first 9 weeks of our fiscal 2023.”
He projected total revenue of approximately $1.3B for the full year, narrowly above the $1.28B consensus. Additionally, restaurant level operating profit of at least 13.0% was forecast for the full year, up from 11.4% in 2022. An adjusted EBITDA forecast of between $62.5M and $72.5M came essentially in-line with a $68.3M consensus expectation.
The optimism on the year ahead was enough to convince Benchmark analyst Todd Brooks to shift to a bullish stance on the stock as he shifted to Buy from Neutral on Wednesday. Brooks voiced confidence in the turnaround for the brand, expecting Hart to “drive meaningful operating and financial improvement” in the coming year.
“An experienced management team is making common sense changes to once again empower operators to deliver an excellent experience for RRGB customers,” he told clients. “The cost of the plan will be an investment for RRGB in FY23, but with more offsets to the incremental spend than we expected from changes in product sourcing and marketing approach. Improved customer satisfaction is expected to improve sales levels over the medium-term, with the increased sales covering the costs of incremental investments to execute the three-year plan.”
Alongside the upgrade to Buy, Brooks assigned a $14 price target to the stock, suggesting still significant upside to shares. Red Robin ( RRGB ) stock rocketed 20.21% higher at the market open on Wednesday.
Read the earnings call transcript .
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Red Robin stock rips 20% higher on upgrade from Benchmark