Why Red Robin's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of burger slinger Red Robin Gourmet Burgers (Nasdaq: RRGB  ) were getting snapped up by investors today as they gained as much 14% intraday trading after the company reported second-quarter results.

So what: What made Red Robin's quarter so tasty? Let's take a quick run down the menu. For the top line starter, we've got 3.7% year-over-year growth to $224 million with a side of 0.8% comparable-store sales growth. On the bottom line, earnings per share rose a scrumptious 8.3% to $0.52.

Ok, so honestly, the growth really wasn't that spectacular. And when we compare the results to analysts' estimates, EPS beat expectations by a penny, but revenue was lower than expected.

Now what: Without a resounding estimate-beating performance for the second quarter, I figured it was probably the company's "updated outlook" for the full year that sent the stock soaring. On the bright side, Red Robin now expects slightly better margins -- between 20% and 20.5%, versus a flat 20% in in its previous outlook. However, it also revised down its full-year outlook for comp-store sales growth from 1% down to 0.5%. That's not terribly encouraging.

To be sure, this wasn't a bad quarter out of Red Robin, but I don't really see a report here worthy of the big rally in the stock.

Want to keep up to date on Red Robin Gourmet Burgers? Add it to your watchlist.

The Motley Fool owns shares of Red Robin Gourmet Burgers. Motley Fool newsletter services have recommended writing covered calls on Red Robin Gourmet Burgers. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


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