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TheStreet Open House

13 Small-Caps Crushing Analysts' Views

Stocks in this article: RAILJRNRRGB

Red Robin Gourmet Burgers

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With every passing month, it seems as if a new burger chain has landed on the scene. Brands such as Five Guys, Snake Shack, Steak-n-Shake and Five Napkin Burger are spreading far beyond their original regions.

In that light, it's especially impressive that Red Robin Gourmet Burgers (RRGB) just posted a nearly 5% gain in same-store sales in the most recent quarter. The chain, which was launched more than 40 years ago, has more than 450 stores across the country and appears unaffected by rising competition.

The better-than-expected sales results helped Red Robin top fourth-quarter profit estimates by 40%, and the company has now exceeded the consensus by an average of 55% over the last four quarters.

Credit goes to new CEO Stephen Carley, who's plans for a turnaround are now taking root. He's already taken roughly $12 million out of the company's cost structure and has identified more gains to come. Carley is also tinkering with a new smaller-store format, known as Burger Works, which appears to be off to a solid start.

Though shares have rebounded from their lows of last summer, they still appear quite reasonable at less than six times projected 2012 EBITDA, on an enterprise value basis. Management thinks that's too low a multiple: The board of directors has just authorized a fresh $50 million stock buyback.

These three companies have a solid degree of operating momentum, as seen by estimate-topping results, and more gains may lie ahead.

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At the time of publication, author had no positions in stocks mentioned.

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