We expect the casual dining restaurant chain
Red Robin Gourmet Burgers Inc.
) 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
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
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.
): Earnings ESP of +9.09% and a Zacks Rank #2 (Buy).
Chuy's Holdings Inc.
): Earnings ESP of +7.14% and a Zacks Rank #2 (Buy).
AFC Enterprises Inc.
): Earnings ESP of +6.45% and a Zacks Rank #2 (Buy).
AFC ENTERPRISES (AFCE): Free Stock Analysis
CHUYS HOLDINGS (CHUY): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
RED ROBIN GOURM (RRGB): Free Stock Analysis
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