Red Robin Likely to Beat in 4Q - Analyst Blog
February 13 2013 - 7:10AM
Zacks
We expect the casual dining restaurant chain Red Robin
Gourmet Burgers Inc. (RRGB) to beat expectations when it
reports fourth quarter and full year 2012 results on Feb 19.
Why a Likely Positive Surprise?
Our proven model shows that Red Robin is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP: The Most Accurate estimate for
Red Robin stands at 47 cents while the Zacks Consensus Estimate is
pegged at 44 cents leading to an Expected Surprise Prediction or
ESP (Read: Zacks Earnings ESP: A Better Method) of +6.82%. This is
a meaningful and leading indicator of a likely positive earnings
surprise for shares.
Zacks Rank #3 (Hold): Red Robin currently retains
a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1,
#2 and #3 have a significantly higher chance of beating earnings.
The sell rated stocks (Zacks Rank #4 and #5) should never be
considered going into an earnings announcement.
The combination of the stock’s Zacks Rank #3 (Hold) and +6.82 % ESP
makes us confident of a positive earnings beat this quarter.
What is Driving the Better Than Expected
Earnings?
The rollout of the October menu, modest additional pricing and
introduction of premium seasonal items are expected to drive sales
this quarter. The comps in the fourth quarter of 2012 will also
benefit from one extra operational week.
Investors should note that Red Robin expects to gain from the
holiday week, which records about 40% higher sales than an average
week. Higher revenues coupled with cost containment efforts and
marketing expertise should also drive earnings growth in the
quarter. The company’s earnings per share surpassed the Zacks
Consensus Estimate in the trailing four quarters with an average
surprise of 25.40%.
Other Stocks to Consider
Other than Red Robin, we also see likely earnings beats coming
from three industry peers this earnings season.
Krispy Kreme Doughnuts Inc. (KKD): Earnings ESP
of +9.09% and a Zacks Rank #2 (Buy).
Chuy's Holdings Inc. (CHUY): Earnings ESP of
+7.14% and a Zacks Rank #2 (Buy).
AFC Enterprises Inc. (AFCE): Earnings ESP of
+6.45% and a Zacks Rank #2 (Buy).
AFC ENTERPRISES (AFCE): Free Stock Analysis Report
CHUYS HOLDINGS (CHUY): Free Stock Analysis Report
KRISPY KREME (KKD): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
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