On Thursday, Lake Street Capital Markets adjusted their price target for Red Robin Gourmet Burgers (NASDAQ: NASDAQ:RRGB) shares, increasing it to $17 from the previous $16, while maintaining a Buy rating on the stock.
This decision follows the company's confirmation of its 2024 revenue guidance, which is projected to be between $1,250 million and $1,275 million, with adjusted EBITDA expected to fall in the range of $60 million to $70 million.
Despite a first quarter that did not meet the firm's initial expectations, Red Robin reported positive comparable sales in the first five weeks of the second quarter. Lake Street Capital Markets notes that Red Robin is experiencing a resurgence and believes that the company's efforts to enhance its brand equity make the stock an attractive investment.
The firm's valuation of Red Robin's shares is based on a 7x EV/EBITDA multiple applied to their revised $56.9 million EBITDA estimate for 2024.
Red Robin's management has reiterated its commitment to achieving the outlined financial targets for 2024. The company's positive momentum in the early part of the second quarter is seen as a sign of a turnaround, suggesting that the strategies in place may be starting to yield results.
The updated price target reflects a modest increase, signaling a degree of confidence in Red Robin's future performance. Lake Street Capital Markets has calculated this new target using an enterprise value to EBITDA (EV/EBITDA) ratio, which is a common valuation metric used to assess companies in the restaurant industry.
InvestingPro Insights
As Red Robin Gourmet Burgers (NASDAQ: RRGB) focuses on meeting its 2024 revenue guidance, insights from InvestingPro provide a deeper look into the company's financial health and market performance. With a market capitalization of $129.67 million, Red Robin operates under a significant debt burden, which is an essential factor for investors to consider. The company's management has been actively buying back shares, which could be indicative of their confidence in the company's prospects. Additionally, Red Robin's P/E ratio stands at -3.85, reflecting challenges in profitability, as analysts do not anticipate the company will be profitable this year. The revenue growth over the last twelve months as of Q4 2023 was 2.96%, showing a degree of resilience in sales.
Investors should note that the company's stock price movements have been quite volatile, with a 1 Year Price Total Return of -46.59%, which may influence investment risk assessment. For those considering a deeper analysis, InvestingPro offers additional InvestingPro Tips that detail factors such as cash burn rate and short-term obligations. To access these insights and more, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 12 additional tips available on InvestingPro, investors can gain a comprehensive understanding of Red Robin's financial landscape.
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