Red Robin Gourmet Burgers Downgraded After Q1 Print Falls Short Of BTIG's Expectations

Red Robin Gourmet Burgers, Inc. RRGB reported first-quarter results Tuesday that prompted BTIG to drop its bullish stance on the stock.

The Analyst

BTIG's Peter Saleh downgraded Red Robin Gourmet Burgers from Buy to Neutral with no assigned price target.

The Thesis

Red Robin earned 69 cents per share in the first quarter, in-line with its guidance range but short of the 76 cents per share Saleh was expecting, the analyst said in the downgrade note. The earnings miss was driven by a 0.9-percent decline in same-store sales, which also fell short of the 0.5-percent gain Saleh expected. On a two-year basis, same-store sales declined 50 basis points sequentially from negative 1.6 percent to negative 2.1 percent.

On the positive front, traffic during Q1 matched the fourth quarter's "healthy pace" of relative outperformance, as it exceeded the Black Box benchmark by 230 basis points, the analyst said Red Robin's off-premise sales grew 40 percent and accounted for 9.4 percent of total sales in the quarter.

Red Robin's earnings volatility presents a "subdued outlook" that makes it difficult to make the case for upside to current EPS expectations for the full year, according to BTIG.