Upside earnings surprises are often the handiwork of tech stocks. Cyclical companies are usually good to rock your world, sometimes for the better. So it might seem a bit peculiar to see a small burger chain like Red Robin Gourmet Burgers (NASDAQ:RRGB) doing its best imitation of a burger bun by topping its roughage.
Just last month, the company raised its second-quarter targets. Instead of earning roughly $0.27 a share, the company would now be producing profits in the range of $0.33 to $0.44 a share for the period. True to its vault, the 240-unit chain posted earnings of $0.36 a share. Now it is looking to raise its guidance for the year as a whole. Instead of earlier projections calling for Red Robin to earn between $1.20 and $1.22 this year, it's now looking at roughly $1.35 per share or revenues of just better than $400 million.
Stacked up against steady grower and rival high-end burger specialist Steak 'n Shake (NYSE:SNS), it's clear that Red Robin is packing a little more octane in its tank. While Steak 'n Shake's 6.3% spike in comps this past quarter betters the 5.7% improvement at Red Robin, the smaller chain is growing faster and also is doing a fascinating job in growing its operating margins.
Burger chains have done well in general as fast food counter-service juggernauts like McDonald's (NYSE:MCD), Wendy's (NYSE:WEN), Jack in the Box (NYSE:JBX), and Checkers (NASDAQ:CHKR) have won over diners with low prices and low-carb options.
While most of its peers are sporting lower bottom-line multiples than Red Robin, they aren't growing as fast. On a growth tear that's hotter than Red Robin's spicy 5 Alarm Burger -- with plenty of real estate left to conquer -- the shares have become more than a mouthful.
Are bunless burgers enough to shed some weight? Is a gourmet burger that much better than its cheaper brethren? Are low-carb diets really starting to fade? All this and more -- in the Fools Fighting Fat Discussion Board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz lives in hurricane magnet Florida -- about a thousand miles from his nearest Red Robin. He does not own shares in any company mentioned in this story.
