Red Robin Gourmet Burgers (RRGB) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Red Robin Gourmet Burgers ( RRGB) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Red Robin Gourmet Burgers as such a stock due to the following factors:

  • RRGB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.7 million.
  • RRGB has traded 92,244 shares today.
  • RRGB traded in a range 247.8% of the normal price range with a price range of $6.78.
  • RRGB traded above its daily resistance level (quality: 52 days, meaning that the stock is crossing a resistance level set by the last 52 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on RRGB:

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, develops, operates, and franchises casual-dining restaurants in the United States and Canada. RRGB has a PE ratio of 32.7. Currently there are 7 analysts that rate Red Robin Gourmet Burgers a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Red Robin Gourmet Burgers has been 181,700 shares per day over the past 30 days. Red Robin Gourmet Burgers has a market cap of $1.0 billion and is part of the services sector and leisure industry. The stock has a beta of 1.10 and a short float of 9.6% with 4.54 days to cover. Shares are down 2.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Red Robin Gourmet Burgers as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 8.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 33.33% and other important driving factors, this stock has surged by 75.92% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, RRGB should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • RED ROBIN GOURMET BURGERS has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, RED ROBIN GOURMET BURGERS increased its bottom line by earning $1.92 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($2.33 versus $1.92).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 31.9% when compared to the same quarter one year prior, rising from $3.53 million to $4.66 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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