News

Red Robin Gourmet Burgers, Inc. RRGB is scheduled to report first-quarter fiscal 2024 results on May 29, after the closing bell. In the last reported quarter, the company delivered a negative earnings surprise of 53.5%.

Q1 Estimates

The Zacks Consensus Estimate is pegged at a loss of 41 cents per share. In the prior-year quarter, RRGB reported earnings per share of 25 cents. The consensus mark for revenues is pegged at $397.1 million, suggesting a decline of 5% year over year.

Factors at Play

Red Robin's fiscal first-quarter top line is likely to have been hurt by dismal traffic and same-store sales. Adverse weather conditions at the beginning of the year significantly impacted sales, a challenge echoed by others in the industry. In January, the company’s same-store sales were significantly negative because of bad weather and tough comparisons to strong sales from the previous year. While February saw a 600-basis point improvement, the sales were still negative.

For the fiscal first quarter of 2024, our models predict restaurant revenues to decrease 4.7% year over year to $387.6 million. We expect same-store sales to decline 4.7% year over year.

Moreover, the company has been investing heavily in several sales-building initiatives like advertising and technical upgrades, which are likely to result in elevated costs. Remodeling, restaurant maintenance and staffing costs are also likely to have led to a rise in expenses.

Our model expects the restaurant-level operating profit margin for the to-be-reported quarter to decrease to 12.4% from 14.7% reported in the year-ago quarter.

What the Zacks Model Unveils

Our proven model doesn’t 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.

Earnings ESP: Red Robin has an Earnings ESP -13.71%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Red Robin has a Zacks Rank #5 (Strong Sell).

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:

Abercrombie & Fitch ANF currently has an Earnings ESP of +5.10% and carries a Zacks Rank #2. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at $1.54, sharply up from 39 cents registered in the year-ago period. You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie & Fitch’s top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $940 million, which indicates an increase of 12.4% from the prior-year quarter. ANF has a trailing four-quarter earnings surprise of 715.6%, on average.

American Eagle Outfitters AEO currently has an Earnings ESP of +11.11% and a Zacks Rank #2. The company is likely to register an increase in the bottom line in first-quarter fiscal 2024. The Zacks Consensus Estimate for quarterly earnings per share of 27 cents suggests an increase of 58.8% from the year-ago quarter.

American Eagle Outfitters’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $1.15 billion, which implies an increase of 5.9% from the year-ago quarter. AEO has a trailing four-quarter earnings surprise of 22.7%, on average.

Dollar Tree DLTR currently has an Earnings ESP of +0.16% and a Zacks Rank #3. The company is likely to register top-line growth in first-quarter fiscal 2024 results. The consensus mark for DLTR’s quarterly revenues is pegged at $7.6 billion, which suggests growth of 4.2% from the prior-year quarter.

The Zacks Consensus Estimate for DLTR’s earnings has moved down by 2 cents to $1.43 per share in the past seven days. However, the consensus estimate indicates a 2.7% decline from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.