Red Robin Gears Up for Q1 Earnings: Key Factors to Note

Red Robin Gourmet Burgers, Inc. RRGB is scheduled to report first-quarter fiscal 2025 results on May 29, after the closing bell. In the last reported quarter, the company delivered a negative earnings surprise of 74.1%.

Q1 Estimates

The Zacks Consensus Estimate is pegged at a loss of 57 cents per share. In the prior-year quarter, RRGB reported adjusted loss per share of 80 cents. The consensus mark for revenues is pegged at $387.4 million, indicating a decline of 0.3% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Factors at Play Ahead of RRGB’s Q1 Results

Red Robin's fiscal first-quarter results are likely to be hurt by pressures from the uncertain macroeconomic environment and high expenses. Moreover, the company has been investing heavily in several sales-building initiatives like advertising and technical upgrades, which might result in elevated costs. Remodeling, restaurant maintenance and staffing costs are expected to have also contributed to rising expenses. Moreover, dismal traffic remains a concern for the company.

On the other hand, the company’s emphasis on loyalty programs and strategic initiatives to drive growth is likely to have aided its performance. Also, the focus on menu innovation and digital initiatives bodes well.

Red Robin has made strategic investments over the past two years to enhance food quality and hospitality, leading to sustained improvements in guest satisfaction. The introduction of flat-top grills and the upgrade of more than 85% of the menu have elevated the gourmet burger experience, while the addition of new team members has strengthened service quality. These efforts have been reflected in consistently strong satisfaction scores, indicating positive guest reception.

For the first quarter of fiscal 2025, our model predicts restaurant revenues to decrease 1.7% year over year to $372.2 million. We expect same-store sales to increase 3.7% year over year.

What the Zacks Model Unveils for RRGB

Our proven model does not conclusively predict an earnings beat for Red Robin this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.

RRGB’s Earnings ESP: Red Robin has an Earnings ESP of -2.35%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

RRGB’s Zacks Rank: Red Robin has a Zacks Rank #3.

Stocks With the Favorable Combination

Here are three companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Dollar General Corporation DG currently has an Earnings ESP of +3.15% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for first-quarter fiscal 2025 earnings per share is pegged at $1.47, implying a 10.9% year-over-year decline. Dollar General’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $10.28 billion, which indicates an increase of 3.7% from the figure reported in the prior-year quarter. DG delivered a trailing four-quarter earnings surprise of 1.2%, on average.

The Kroger Co. KR currently has an Earnings ESP of +0.38% and a Zacks Rank of 3. KR’s top line is anticipated to advance year over year when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $45.38 billion, which indicates a 0.3% rise from the figure reported in the year-ago quarter.

The company is expected to register an increase in the bottom line. The consensus estimate for Kroger’s first-quarter earnings is pegged at $1.44 per share, up 1% from the year-ago quarter. KR delivered a trailing four-quarter earnings surprise of 2.6%, on average.

Victoria's Secret & Co. VSCO currently has an Earnings ESP of +54.55% and a Zacks Rank #3. The Zacks Consensus Estimate for current-quarter earnings per share is pegged at 4 cents, down from 12 cents registered in the year-ago period.

Victoria's Secret's quarterly revenues are pegged at $1.33 billion, which indicates a decline of 2.1% from the prior-year quarter. VSCO delivered a trailing four-quarter earnings surprise of 12.3%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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