Why Red Robin Gourmet Burgers, Inc. Stock Jumped 28% in March

By Steve Symington Markets Fool.com

What happened

Continue Reading Below

Shares ofRed Robin Gourmet Burgers Inc.(NASDAQ: RRGB) rose 28% in the March,according to data fromS&P Global Market Intelligence, on the heels of the restaurant chain's encouraging fiscal fourth-quarter 2017 report in late February.

So what

That's not to say Red Robin's quarter looked jaw-droppingly good on the surface. Revenue climbed a modest 1.8% year over year, to $291.5 million, driven entirely by contributions from newer locations. Comparable-restaurant revenue -- which includes those restaurants that have operated for at least five full quarters -- declined 4.3%. On the bottom line, that translated to adjusted earnings per share of $0.35, down from $0.86 per share in the same year-ago period. By comparison, however, analysts were expecting adjusted earnings of just $0.29 per share on slightly higher revenue of $297 million.

IMAGE SOURCE: RED ROBIN GOURMET BURGERS INC.

Red Robin CEO Denny Marie Post elaborated:

Continue Reading Below

The changes we made to streamline the team and focus on value, speed, and service in the back half of last year have strengthened our business and resulted in significantly improved guest service scores.We began this year piloting several off-premise growth initiatives. We will roll out the most promising programs as quickly as possible to support year-over-year earnings growth in the back half of 2017, heavily weighted to the fourth quarter as these programs come together.

Now what

During the subsequent conference call, Red Robin management also promised to share more details at the company's analyst meeting in May regarding its "multi-year vision" and results of the testing and rollout of its off-premise business efforts.

But given Red Robin's improving guest service scores already, as well as its expected return to earnings growth later this year, it was no surprise to see investors bidding up Red Robin stock last month.

10 stocks we like better than Red Robin Gourmet Burgers
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now and Red Robin Gourmet Burgers wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of April 3, 2017

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.