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Category: Shake Shack (SHAK) and Red Robin Gourmet Burgers (RRGB)
Date: 11 July 2020 Stock price of Shake Shack: $48.29 Stock price of Red Robin Gourmet Burgers: $8.51 Battle of the burger joints. We compare the stock price performance of Shake Shack (SHAK) and Red Robin Gourmet Burgers (RRGB) over the last couple of years as well as investigate which one of these two burger joints is poised to provide superior returns to stockholders in the future.
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So if one had to buy one of these two burger joint stocks now which one is the better buy? So does the stock of Red Robin (RRGB) provide a greater buying opportunity because it has declined FAR more over the five year period than the stock of Shake Shack (SHAK), or is there a fundamental underlying reason why the stock of Red Robin declined so much more than the stock of Shake Shack? "
More About Shake Shack (SHAK)
Shake Shack is a modern day “roadside” burger stand serving a classic American menu of premium burgers, hot dogs, crinkle-cut fries, shakes, frozen custard, beer and wine. With its fresh and simple, high-quality food at a great value, Shake Shack is a fun and lively community-gathering place with widespread appeal.
Overview of Shake Shack's latest earnings report
Shack counts (at end of period):
Overview of Shake Shack's latest earnings report
- Revenues: $141.170 million (up from $132.069 million for the same quarter of the previous year)
- Revenues increased by 6.8% over the last 12 months
- Total expenses: $143.957 million (up from $127.447 million for the same quarter of the previous year)
- Operating expenses increased by 12.9% over the last 12 months
- Some margin squeeze being experienced by Shake Shack is their revenues grew at a slower rate than their expenses
- Net loss: -$960 thousand (down from a profit of $2.546 million for the same quarter of the previous year)
- Diluted earnings per share: -$0.03 (down from $0.08 for the same quarter of the previous year)
- PE ratio of Shake Shack: Since the group is currently loss making no PE ratio can be calculated
- Diluted number of shares in issue: 34.444 million (up from 30.392 million for the same quarter of the previous year)
- Cash and cash equivalents: $87.806 million
- Cash and cash equivalents per share: $2.54
- Cash and cash equivalents makes up 5.27% of Shake Shack's market capital
- Cash and cash equivalents makes up 8.4% of Shake Shack's total assets
- Cash and cash equivalents per share: $2.54
- Stockholders equity in Shake Shack: $322.606 million
- Stockholders equity per share: $9.36
- Shake Shack is trading at 5.15 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
- Stockholders equity per share: $9.36
Shack counts (at end of period):
- System-wide: 287
- Domestic company-operated: 166
- Domestic licensed: 22
- International licensed: 98
More About Red Robin Gourmet Burgers (RRGB)
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), a casual dining restaurant chain founded in 1969 that operates through its wholly-owned subsidiary, Red Robin International, Inc., and under the trade name, Red Robin Gourmet Burgers and Brews, is the Gourmet Burger Authority™, famous for serving more than two dozen craveable, high-quality burgers with Bottomless Steak Fries® in a fun environment welcoming to guests of all ages. At Red Robin, burgers are more than just something guests eat; they're a bonding experience that brings together friends and families, kids and adults. In addition to its many burger offerings, Red Robin serves a wide variety of salads, soups, appetizers, entrees, desserts and signature beverages. Red Robin offers a variety of options behind the bar, including its extensive selection of local and regional beers and innovative cocktails, earning the restaurant a VIBE Vista Award for Best Beer Program in a Multi-Unit Chain Restaurant. It's now easy to take Red Robin anywhere with online ordering for to-go, delivery, and Gourmet Burger Bar catering. There are more than 560 Red Robin restaurants across the United States and Canada, including those operating under franchise agreements
Overview of Red Robin Gourmet Burgers latest earnings report
Overview of Red Robin Gourmet Burgers latest earnings report
- Revenues: $306.065 million (down from $409.866 million from the same quarter of the previous year)
- Revenues decreased by -25.3% over the last 12 months
- Cost and expenses: $462.294 million (up from $406.465 million for the same quarter of the previous year)
- Cost and expenses increased by 13.7% over the last 12 months
- Net loss: -$174.3 million (down from $639 thousand for the same quarter of the previous year)
- Diluted earnings per share: -$13.51 (down from $0.05 for the same quarter of the previous year)
- PE ratio of Red Robin: Since the group is currently making a loss a PE ratio cannot be calculated
- Diluted weighted-average shares outstanding: 12.903 million (down from 13.041 million for the same quarter of the previous year)
- Cash and cash equivalents: $88.920 million
- Cash and cash equivalents per share: $6.89
- Cash and cash equivalents makes up 47.2% of Red Robin Gourmet Burgers current market capital
- Cash and cash equivalents makes up 7.9% of Red Robin Gourmet Burgers total assets
- Cash and cash equivalents per share: $6.89
- Inventories: $24.863 million (up from $26.424 million for the same quarter of the previous year)
- Inventories makes up 2.2% of Red Robin Gourmet Burgers total assets
- Accounts receivable: $10.263 million (down from $22.372 million for the same quarter of the previous year)
- Accounts receivable makes up 0.9% of Red Robin Gourmet Burgers total assets
- Total shareholders' equity of Red Robin Gourmet Burgers: $184.369 million
- Shareholders' equity per share: $14.29
- So Red Robin Gourmet Burgers is trading at 1.02 times the stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at.
- Shareholders' equity per share: $14.29
Shake Shack (SHAK) vs Red Robin Gourmet Burgers (RRGB)
The image below shows the stock price performance of Shake Shack (SHAK) and Red Robin over the last 5 years. Both these firms are active in casual dining and takeaway industry with a focus on burgers. Their stock price performance however is very different. Over the 5 year period Shake Shack's stock price has been far more volatile with greater ups and downs, while the stock of Red Robin has been in an almost constant decline over the same time period. Over the last 5 years the stock of Shake Shack has declined by -25.32% while the stock of Red Robin has declined by a far more significant -90.4%
So if one had to buy one of these two burger joint stocks now which one is the better buy? So does the stock of Red Robin (RRGB) provide a greater buying opportunity because it has declined FAR more over the five year period than the stock of Shake Shack (SHAK), or is there a fundamental underlying reason why the stock of Red Robin declined so much more than the stock of Shake Shack?
One of our key metrics is the Price to Stockholders equity per share ratio. When looking at this we find the following for both stocks:
Based on this metric Red Robin Gourmet Burgers offers far more value than Shake Shack. Most firms tend to trade at a ratio of between 2 and 4 times. While Shake Shack is trading well above the expected range that most firms tend to trade at while Red Robin Gourmet Burgers is trading at well below the expected range.
Next up cash as percentage of stock price. Cash per share makes up just over 5.3% of Shake Shack's stock price while Red Robin Gourmet Burgers' cash makes up 47.2% of their stock price.
Next up lets take a look at the percentage cash on the balance sheet makes up of each group's total assets. Total cash as percentage of total assets is as follows. Cash makes up 8.4% of Shake Shack's total assets while Red Robin Gourmet Burgers' cash makes up around 7.9 of their total assets. So it does look like Shake Shack is better placed to ride out difficult times as is currently being experienced during Covid-19 as their cash as percentage of total assets is greater than that of Red Robin. But it is fairly similar between the two groups.
While Shack Shack is the far stronger brand name, from a valuation point of view, when looking at the Price/Stockholders equity per share ratio, Shake Shack is far more expensive than Red Robin, Cash as a percentage of stock price, Red Robin's cash makes up almost 50% of the group's stock price. This is indicative of how low Red Robin's stock price is, as cash only makes up 5.3% of Shake Shack's stock price. But when looking at cash as percentage of total assets of each firms the numbers are very similar.
All things considered if we have to choose between Shake Shack and Red Robin Gourmet Burgers we will go for the unpopular choice and call Red Robin Gourmet Burgers our Winner
- Price/Stockholders equity per share for Shake Shack: 5.15
- Price/Stockholders equity per share for Red Robin Gourmet Burgers: 1.02
Based on this metric Red Robin Gourmet Burgers offers far more value than Shake Shack. Most firms tend to trade at a ratio of between 2 and 4 times. While Shake Shack is trading well above the expected range that most firms tend to trade at while Red Robin Gourmet Burgers is trading at well below the expected range.
Next up cash as percentage of stock price. Cash per share makes up just over 5.3% of Shake Shack's stock price while Red Robin Gourmet Burgers' cash makes up 47.2% of their stock price.
Next up lets take a look at the percentage cash on the balance sheet makes up of each group's total assets. Total cash as percentage of total assets is as follows. Cash makes up 8.4% of Shake Shack's total assets while Red Robin Gourmet Burgers' cash makes up around 7.9 of their total assets. So it does look like Shake Shack is better placed to ride out difficult times as is currently being experienced during Covid-19 as their cash as percentage of total assets is greater than that of Red Robin. But it is fairly similar between the two groups.
While Shack Shack is the far stronger brand name, from a valuation point of view, when looking at the Price/Stockholders equity per share ratio, Shake Shack is far more expensive than Red Robin, Cash as a percentage of stock price, Red Robin's cash makes up almost 50% of the group's stock price. This is indicative of how low Red Robin's stock price is, as cash only makes up 5.3% of Shake Shack's stock price. But when looking at cash as percentage of total assets of each firms the numbers are very similar.
All things considered if we have to choose between Shake Shack and Red Robin Gourmet Burgers we will go for the unpopular choice and call Red Robin Gourmet Burgers our Winner