It's been a sad week for Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB), who've watched their investment drop 10% to US$4.34 in the week since the company reported its quarterly result. The results don't look great, especially considering that statutory losses grew 42% toUS$0.61 per share. Revenues of US$300m did beat expectations by 2.7%, but it looks like a bit of a cold comfort. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Red Robin Gourmet Burgers after the latest results.
Taking into account the latest results, the current consensus, from the five analysts covering Red Robin Gourmet Burgers, is for revenues of US$1.25b in 2024. This implies a small 2.3% reduction in Red Robin Gourmet Burgers' revenue over the past 12 months. Losses are expected to hold steady at around US$2.60. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.25b and losses of US$1.40 per share in 2024. While this year's revenue estimates held steady, there was also a regrettable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target fell 25% to US$10.63per share, with the analysts clearly concerned by ballooning losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Red Robin Gourmet Burgers at US$16.00 per share, while the most bearish prices it at US$5.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 4.6% by the end of 2024. This indicates a significant reduction from annual growth of 2.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Red Robin Gourmet Burgers is expected to lag the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Red Robin Gourmet Burgers. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Red Robin Gourmet Burgers going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 4 warning signs for Red Robin Gourmet Burgers you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.