This article is part of our Rising Star Portfolios series.

When a D student comes home with a C+, it's hard not to get a little excited. Not because the performance was great, just that it wasn't awful (again). And that's the feeling I get from the latest earnings release from Red Robin Gourmet Burgers (Nasdaq: RRGB).

The burger chain released quarterly profit that shocked the Street -- $0.58 per share, compared with expectations of just $0.24. That fairly counts as obliterating the estimate. But revenue was up a modest 4%. In response, the market sent shares up 23% on Friday. I'm surprised by the reaction -- but not because I didn't profit. In my Rising Star Portfolio I own shares that are now up more than 60% on two separate purchases. You can read the original buy rec here.

I'm happy with the company's ability to cut costs in the latest quarter. Red Robin eliminated corporate headcount and shored up operations at the restaurant level, including reductions in labor and occupancy costs. You can see that performance in restaurant margins, which clocked up nicely from 18.2% to 19.8% in the most recent quarter.  On the call, the company reiterated its promise to cut costs, by a cumulative $16 million to $18 million by the end of 2012. That action alone would offer more than $1 per share in earnings.

Another positive was that the company repurchased nearly 400,000 shares of its stock, or about 2.5% of outstanding stock. The average purchase price was around $24 a stub, a solid buy given recent prices. Red Robin has more than $15 million left to meet its intention to buy $25 million in stock in the first half.  

No, what concerns me is the meager increase in same-store sales. While players such as McDonald's (NYSE: MCD) and Chipotle (NYSE: CMG) report quarter after quarter of solid gains in comps, Red Robin's comps gain was just 1.9% this quarter. Coming off already depressed levels, only 0.9% of that 1.9% was due to increased traffic. Since Red Robin is a turnaround, traffic is one of the key things I'm keeping an eye on. Still, positive comps are positive.

Overall, it was a decent performance, and the Street's relatively low expectations helped lead to a massive pop when this underperformer finally started showing some of its potential. How would you grade Red Robin's quarter?

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Jim Royal, Ph.D., owns shares of Red Robin and McDonald's. The Motley Fool owns shares of Red Robin and Chipotle. Motley Fool newsletter services have recommended McDonald's and Chipotle, along with creating a write covered strangle position in Red Robin. 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. The Motley Fool has a disclosure policy.