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Can Red Robin's Strategic Efforts Shield It From Coronavirus?

Zacks Equity Research

The devastating impact of the novel coronavirus outbreak (COVID-19) on the global economy has compelled Red Robin Gourmet Burgers, Inc. RRGB to withdraw its previously announced 2020 guidance. Thanks to the crisis, the company has also suspended its share repurchase programs. 

To mitigate the financial impact of the COVID-19 pandemic, the company initiated certain actions to preserve liquidity and enhance financial flexibility. Notably, the company’s executive committee agreed to a 20% pay cut effective from Mar 30. The board member cash retainer fees have also been reduced by 20%. Moreover, its capital expenditures regarding the rollout of Donato’s, restaurant refreshes and IT projects have been delayed.

While initiating advanced health and safety protocols across its business for its employees, Red Robin also continues to market off-premise opportunities primarily through digital channels. Notably, the company has been operating only through pick-up and delivery services with the dine-in facility being waived.

Although, this deadly severe acute respiratory syndrome has claimed too many lives so far, the company shows enough resilience to emerge unscathed and welcome back its team members as well as guests when it is legal and safe. So far this year, shares of the company have plummeted 76.7% compared with the industry’s decline of 23.9%.

With the coronavirus pandemic showing no signs of abatement, most companies across the world are undertaking measures to tackle the situation. The companies are not only stalling productions but are also focusing on cost-cutting actions. Despite best efforts by policymakers, it is becoming more difficult for companies to survive amid such trying times.

Zacks Rank & Key Picks

Red Robin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks worth considering in the same space include Cracker Barrel Old Country Store, Inc. CBRL, BJ's Restaurants, Inc. BJRI and Chuy's Holdings, Inc. CHUY. Cracker Barrel sports a Zacks Rank #1, while BJ's Restaurants and Chuy's Holdings carry a Zacks Rank #2 (Buy). 

Cracker Barrel has trailing four-quarter positive earnings surprise of 7.8%, on average. The company’s earnings beat the Zacks Consensus Estimate in all of the last four quarters.

BJ's Restaurants has an expected three-five year earnings per share growth rate of 15%.

2021 earnings for Chuy's Holdings are expected to surge 135%.

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BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report
 
Red Robin Gourmet Burgers, Inc. (RRGB) : Free Stock Analysis Report
 
Cracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis Report
 
Chuy's Holdings, Inc. (CHUY) : Free Stock Analysis Report
 
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