Trade-Ideas: Red Robin Gourmet Burgers (RRGB) Is Today's New Lifetime High Stock

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.

Trade-Ideas LLC identified Red Robin Gourmet Burgers ( RRGB) as a new lifetime high 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 $18.1 million.
  • RRGB has traded 56,932 shares today.
  • RRGB is trading at a new lifetime high.

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More details on RRGB:

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, develops, operates, and franchises casual-dining and fast-casual restaurants in the United States and Canada. As of December 28, 2014, it had 514 restaurants, including 415 company-owned restaurants and 99 franchised restaurants. RRGB has a PE ratio of 34. Currently there are 6 analysts that rate Red Robin Gourmet Burgers a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Red Robin Gourmet Burgers has been 270,400 shares per day over the past 30 days. Red Robin Gourmet Burgers has a market cap of $1.2 billion and is part of the services sector and leisure industry. The stock has a beta of 0.52 and a short float of 9.6% with 6.64 days to cover. Shares are up 14.1% year-to-date as of the close of trading on Friday.

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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, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 15.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • RED ROBIN GOURMET BURGERS has improved earnings per share by 41.5% 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 $2.25 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($3.18 versus $2.25).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 38.7% when compared to the same quarter one year prior, rising from $11.94 million to $16.57 million.
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.24 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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