Red Robin Stock Bombs on CEO Departure, Sales Warning

RRGB's interim CEO said "challenging weather" impacted first-quarter revenue

Digital Content Manager
Apr 4, 2019 at 10:40 AM
facebook twitter linkedin

The shares of restaurant chain Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) are slipping today, after CEO Denny Marie Post announced her retirement. The announcement comes at a tumultuous time for the burger company, with interim CEO Pattye Moore reporting weak first-quarter comparable-store sales, citing "challenging weather" in the U.S. As a result, RRGB shares are down 8.7% at $25.77 in early trading, set for their lowest close since 2011. 

It's been a tough year for RRGB, which suffered two major bear gaps in 2018, and bottomed out at a six-year low of $25.46 on Dec 26. Today, the equity is dangerously close to those lows, dipping below former support at the $27 level, and falling south of its year-to-date breakeven. 

Analysts are already chiming in, with BofA-Merrill Lynch downgrading Red Robin stock to "neutral" from "buy." Jefferies, meanwhile, cut its price target to $29 from $34, and Loop Capital trimmed its target to $31 from $35 and cut its earnings estimates for 2019 and 2020. Prior to today, there were nine "holds" already on the table, and only two "strong buy" ratings. However, the consensus 12-month target price of $32.11 represents a 20.5% premium to current levels, leaving the door open for additional price-target cuts. 

Meanwhile, recent option buyers are likely kicking rocks today. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), RRGB sports a 10-day call/put volume ratio of 2.67 that sits in the 82nd percentile of its annual range, suggesting a healthier-than-usual appetite for bullish bets of late. Should these optimistic positions start to unwind, the equity could face additional headwinds. 


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners