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Category: Stock Market and Red Robin Gourmet Burgers (RRGB)
Date: 16 August 2020 Stock Price of Red Robin: $9.71 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of Red Robin Gourmet Burgers, a franchise casual dining burger and beer joint that has over 560 stores across the United States and Canada. Revenue for the quarter declined by -25.3% and the group recorded a loss of -$56.2 million.
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- Having strengthened our liquidity through our recent equity raise of almost $30 million, we are managing our business prudently while continuing to progress the foundational pillars in our previously articulated strategic plan to create long-term value for our shareholders - Paul J.B. Murphy III, Red Robin's President and Chief Executive Officer "
About Red Robin Gourmet Burgers
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 2nd quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise
- Revenues: $161.122 million (down from $307.981 million from the same quarter of the previous year)
- Revenues decreased by -25.3% over the last 12 months
- Cost and expenses: $211.704 million (down from $320.833 million for the same quarter of the previous year)
- Cost and expenses decreased by -34% over the last 12 months
- Net loss: -$56.2 million (down from 983 thousand for the same quarter of the previous year)
- Diluted earnings per share: -$4.09 (down from $0.08 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 13.741 million (up from 13.043 million for the same quarter of the previous year)
- PE ratio: Since the group is currently making a loss a PE ratio cannot be calculated
- Cash and cash equivalents: $16.138 million
- Cash and cash equivalents per share: $1.92
- Cash and cash equivalents makes up 19.6% of Red Robin Gourmet Burgers current market capital
- Cash and cash equivalents makes up 2.5% of Red Robin Gourmet Burgers total assets
- Inventories: $24.983 million
- Inventories makes up 2.4% of Red Robin Gourmet Burgers total assets
- Accounts receivable: $8.98 million
- Accounts receivable makes up 0.84% of Red Robin Gourmet Burgers total assets
- Total shareholders' equity of Red Robin Gourmet Burgers: $158.091 million
- Shareholders' equity per share: $11.50
- So Red Robin Gourmet Burgers is trading at 0.84 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.
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
Red Robins management commentary on their 2nd quarter 2020 earnings report
GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Aug. 11, 2020-- Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) ("Red Robin" or the "Company"), a full-service restaurant chain serving an innovative selection of high-quality gourmet burgers in a family-friendly atmosphere, today reported financial results for the quarter ended July 12, 2020.
Paul J.B. Murphy III, Red Robin's President and Chief Executive Officer, said, “We are accelerating the transformation of our business through exceptional hospitality and uncompromising health and safety standards, despite the challenges created by the recent surge in COVID-19 cases and localized, renewed mandates to re-close dining rooms. In addition to generating sequential improvement in average weekly net sales per restaurant over the last five weeks, our record-high dine-in and off-premise satisfaction scores validate our consistent, quality execution as we build trust and affinity within our communities.”
Murphy continued, “Having strengthened our liquidity through our recent equity raise of almost $30 million, we are managing our business prudently while continuing to progress the foundational pillars in our previously articulated strategic plan to create long-term value for our shareholders. This plan includes executing our TGX hospitality model, implementing Donatos® Pizza in our restaurants, and improving our digital experience to drive increased Guest engagement and frequency.”
Paul J.B. Murphy III, Red Robin's President and Chief Executive Officer, said, “We are accelerating the transformation of our business through exceptional hospitality and uncompromising health and safety standards, despite the challenges created by the recent surge in COVID-19 cases and localized, renewed mandates to re-close dining rooms. In addition to generating sequential improvement in average weekly net sales per restaurant over the last five weeks, our record-high dine-in and off-premise satisfaction scores validate our consistent, quality execution as we build trust and affinity within our communities.”
Murphy continued, “Having strengthened our liquidity through our recent equity raise of almost $30 million, we are managing our business prudently while continuing to progress the foundational pillars in our previously articulated strategic plan to create long-term value for our shareholders. This plan includes executing our TGX hospitality model, implementing Donatos® Pizza in our restaurants, and improving our digital experience to drive increased Guest engagement and frequency.”
Balance Sheet and Liquidity
As of July 12, 2020, the Company had total debt of $207.5 million, of which $9.7 million was classified as current. The Company made net repayments of $83.4 million on its credit facility during the second quarter of 2020. As of July 12, 2020, the Company had outstanding borrowings under its credit facility of $206.6 million, in addition to amounts issued under letters of credit of $7.5 million. Amounts issued under letters of credit reduce the amount available under the credit facility but are not recorded as debt. As of July 12, 2020, the Company had approximately $107.2 million in total liquidity including cash and cash equivalents and available borrowing capacity under our revolving line of credit. The average cash burn rate for the second quarter of 2020 was approximately $1 million per week.
On January 10, 2020, the Company replaced its credit facility with a new five-year Amended and Restated Credit Agreement (the "Credit Agreement") which provides for a $161.5 million revolving line of credit and a $138.5 million term loan for a total borrowing capacity of $300 million. The Credit Agreement is included as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on January 13, 2020.
On May 29, 2020, the Company entered into the First Amendment to the Credit Agreement and Waiver (the "Amendment") that waived compliance of the lease adjusted leverage ratio financial covenant and fixed charge coverage ratio financial covenant for the first and second quarters of 2020, and it waives compliance for the remainder of fiscal 2020 and sets forth adjusted covenant ratios for fiscal year 2021 provided the Company issued new equity (or convertible debt) generating net cash proceeds of at least $25 million on or before November 13, 2020. The equity issuance requirement of the Amendment was satisfied on June 17, 2020 when the Company issued 2.6 million shares of common stock raising proceeds of $28.7 million, net of stock issuance costs, through its at-the-market equity offering. The Amendment was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on May 29, 2020.
As of August 9, 2020, the Company had more than $103 million in total liquidity, including cash and cash equivalents and available borrowing capacity under our revolving line of credit. We currently expect an average cash burn of approximately $2 million per week for the third fiscal quarter, including the impact of increased occupancy payments compared to the second quarter.
Restaurants with Open Indoor Dining Rooms
As of August 9, 2020, the Company has re-opened 346 indoor dining rooms with limited capacity, representing approximately 84% of currently open Company-owned restaurants. Notably, these restaurants have on average maintained off-premise sales that are approximately 40% of sales mix after re-opening dining rooms. As dining rooms have re-opened, the Company has continued to focus on the mutual health and safety of our Guests and Team Members. In addition to the health and safety measures implemented in the first quarter of 2020, we recently began expanding outdoor seating beyond restaurant patios where possible, piloting partitions between tables in our dining rooms, requiring Guests to wear face coverings in all locations, while entering, exiting, and walking around the restaurant, and providing face masks to Guests who arrive at our restaurants without one.
The Company has been required to re-close dining rooms since the release of our first quarter earnings at numerous Company-owned restaurants, including 53 indoor dining rooms in California due to a state mandate in early July, from the effects of increased COVID-19 cases in certain states and localities. Since these closures in early July, our average weekly net sales per restaurant has increased through the week ended August 9, 2020 even as these indoor dining rooms have remained closed.
Outlook for 2020 and Guidance Policy
In light of the ongoing uncertainty regarding the duration and impact of the COVID-19 pandemic, the Company withdrew its 2020 and long-term financial outlook on April 1, 2020.
As of July 12, 2020, the Company had total debt of $207.5 million, of which $9.7 million was classified as current. The Company made net repayments of $83.4 million on its credit facility during the second quarter of 2020. As of July 12, 2020, the Company had outstanding borrowings under its credit facility of $206.6 million, in addition to amounts issued under letters of credit of $7.5 million. Amounts issued under letters of credit reduce the amount available under the credit facility but are not recorded as debt. As of July 12, 2020, the Company had approximately $107.2 million in total liquidity including cash and cash equivalents and available borrowing capacity under our revolving line of credit. The average cash burn rate for the second quarter of 2020 was approximately $1 million per week.
On January 10, 2020, the Company replaced its credit facility with a new five-year Amended and Restated Credit Agreement (the "Credit Agreement") which provides for a $161.5 million revolving line of credit and a $138.5 million term loan for a total borrowing capacity of $300 million. The Credit Agreement is included as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on January 13, 2020.
On May 29, 2020, the Company entered into the First Amendment to the Credit Agreement and Waiver (the "Amendment") that waived compliance of the lease adjusted leverage ratio financial covenant and fixed charge coverage ratio financial covenant for the first and second quarters of 2020, and it waives compliance for the remainder of fiscal 2020 and sets forth adjusted covenant ratios for fiscal year 2021 provided the Company issued new equity (or convertible debt) generating net cash proceeds of at least $25 million on or before November 13, 2020. The equity issuance requirement of the Amendment was satisfied on June 17, 2020 when the Company issued 2.6 million shares of common stock raising proceeds of $28.7 million, net of stock issuance costs, through its at-the-market equity offering. The Amendment was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on May 29, 2020.
As of August 9, 2020, the Company had more than $103 million in total liquidity, including cash and cash equivalents and available borrowing capacity under our revolving line of credit. We currently expect an average cash burn of approximately $2 million per week for the third fiscal quarter, including the impact of increased occupancy payments compared to the second quarter.
Restaurants with Open Indoor Dining Rooms
As of August 9, 2020, the Company has re-opened 346 indoor dining rooms with limited capacity, representing approximately 84% of currently open Company-owned restaurants. Notably, these restaurants have on average maintained off-premise sales that are approximately 40% of sales mix after re-opening dining rooms. As dining rooms have re-opened, the Company has continued to focus on the mutual health and safety of our Guests and Team Members. In addition to the health and safety measures implemented in the first quarter of 2020, we recently began expanding outdoor seating beyond restaurant patios where possible, piloting partitions between tables in our dining rooms, requiring Guests to wear face coverings in all locations, while entering, exiting, and walking around the restaurant, and providing face masks to Guests who arrive at our restaurants without one.
The Company has been required to re-close dining rooms since the release of our first quarter earnings at numerous Company-owned restaurants, including 53 indoor dining rooms in California due to a state mandate in early July, from the effects of increased COVID-19 cases in certain states and localities. Since these closures in early July, our average weekly net sales per restaurant has increased through the week ended August 9, 2020 even as these indoor dining rooms have remained closed.
Outlook for 2020 and Guidance Policy
In light of the ongoing uncertainty regarding the duration and impact of the COVID-19 pandemic, the Company withdrew its 2020 and long-term financial outlook on April 1, 2020.
Red Robin Gourmet Burgers (NASDAQ: RRGB) stock price history
The image below obtained from Google shows the stock price history of Red Robin over the last 5 years. And its not been a good time for Red Robin stockholders. 5 years ago the stock was trading at $80.50 a stock and its currently trading at $9.71. Thats a significant loss of -87.9% over the last 5 years.
The stock of Red Robin is trading at closer to its 52 week low of $4.04 than it is to its 52 week high of $37.29 showing that short term sentiment and momentum towards Red Robin Gourmet Burgers is negative at this point in time.
The stock of Red Robin is trading at closer to its 52 week low of $4.04 than it is to its 52 week high of $37.29 showing that short term sentiment and momentum towards Red Robin Gourmet Burgers is negative at this point in time.
Red Robin Gourmet Burgers (RRGB) stock vs Shake Shack (SHAK) stock
The image below shows the stock price performance of Red Robin Gourmet Burgers (RRGB) and Shake Shack (SHAK) over the last 5 years. While both firms sell American favorites such as burgers and beers the stock performance of the two firms over the last 5 years are very different. The summary below shows the stock price performance of these two stocks over the last 5 years:
- Shake Shack: 12.3%
- Red Robin Gourmet Burgers: -87.9%
Recent coverage of Red Robin Gourmet Burgers
The extract below covers the latest regarding HD Supply as obtained from Finance.yahoo.com
Shares of Red Robin Gourmet Burgers (NASDAQ: RRGB) moved lower by 11.19% in after-market trading after the company reported Q2 results. Quarterly Results Earnings per share decreased 421.36% over the past year to ($3.31), Shares of Red Robin Gourmet Burgers (NASDAQ:RRGB) moved higher by 7.3% in after-market trading after the company reported Q2 results.
Quarterly Results
Earnings per share decreased 421.36% over the past year to ($3.31), which missed the estimate of ($3.30).
Revenue of $161,122,000 decreased by 47.68% year over year, which missed the estimate of $166,060,000.
Looking Ahead
Earnings guidance hasn't been issued by the company for now.
Revenue guidance hasn't been issued by the company for now
Read the full article here
Shares of Red Robin Gourmet Burgers (NASDAQ: RRGB) moved lower by 11.19% in after-market trading after the company reported Q2 results. Quarterly Results Earnings per share decreased 421.36% over the past year to ($3.31), Shares of Red Robin Gourmet Burgers (NASDAQ:RRGB) moved higher by 7.3% in after-market trading after the company reported Q2 results.
Quarterly Results
Earnings per share decreased 421.36% over the past year to ($3.31), which missed the estimate of ($3.30).
Revenue of $161,122,000 decreased by 47.68% year over year, which missed the estimate of $166,060,000.
Looking Ahead
Earnings guidance hasn't been issued by the company for now.
Revenue guidance hasn't been issued by the company for now
Read the full article here
Red Robin Gourmet Burgers (NASDAQ: RRGB) latest stock valuation
So what is Red Robin Gourmet Burgers stock worth after the release of their 1st quarter 2020 earnings report? Based on RRGB's latest earnings report and the fact that they are loss making we value to stock of RRGB at their stockholders equity per share. We therefore value Red Robin Gourmet Burgers at $11.50 a stock (down significantly from our last valuation of Red Robin Gourmet Burgers). We therefore feel the stock of Red Robin Gourmet Burgers is undervalued at its current price.
We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price which in this case is $11.50. We see a good entry point into the stock of Red Robin Gourmet Burgers at $10.40 or below.
We expect the stock of Red Robin Gourmet Burgers to kick up to levels closer to our target price as the Covid-19 pandemic subsides.
We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price which in this case is $11.50. We see a good entry point into the stock of Red Robin Gourmet Burgers at $10.40 or below.
We expect the stock of Red Robin Gourmet Burgers to kick up to levels closer to our target price as the Covid-19 pandemic subsides.
Next earnings release of Red Robin Gourmet Burgers
It is expected that Red Robin will release their 3rd quarter 2020 earnings report in early November 2020