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Red Robin Gourmet Burgers: Grocery store on a bun

Some folks say that a hamburger is just a hamburger, but that's just not right. There is an outfit in Greenwood Village, Colorado that makes them so big you need to back up and get a running start.

Red Robin Gourmet Burgers (NASDAQ: RRGB) is a casual dining restaurant chain, known for its menu of more than twenty gourmet burgers in a variety of recipes. There are more than 360 Red Robin restaurants across the United States and Canada. The company operates about 60% of the locations and franchises the rest. Major competitors include Burger King (NYSE: BKC), McDonald's (NYSE: MCD) and Wendy's International (NYSE: WEN).

The firm pleased shareholders last week when it reported Q1 EPS of 44 cents and revenues of $212.3 million. Analysts had been expecting 42 cents and $211.6 million. Management also offered essentially in-line guidance for FY07 results. RRGB shares popped through 200-day, 50-day and 30-day moving average resistance on the news and then began to define a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with five "strong buys," two "buys" and seven "holds." Analysts see a 20% average annual growth rate through the next five years. The stock's Price to Sales ratio (1.08), Price to Book ratio (2.81), Price to Cash Flow ratio (10.73) and Sales Growth rate (24.52%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks it has traded between $32.42 to $50.85. A stop-loss of $37.25 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

Electronic Arts up 12%, Red Robin down 27%

Electronic Arts, Inc. (NASDAQ:ERTS) shares were up 12% to $59.45 in heavy trading with two hours to go in the session. Already in the pre-market, ERTS rose more than 8% after reporting earnings that beat estimates and boosting its fiscal year guidance as well as having a positive industry outlook for next year.

ERTS reported a 16% increase in sales for the quarter to $784 million, while analysts had expected $673 million. Some of the company's games such as the Madden NFL '07 and NCAA Football '07 saw record sales. The company is gearing up for the new PlayStation 3 from Sony Corporation (NYSE:SNE) which should launch this month.

Electronic Arts also raised its full-year sales forecast and said it would earn up to 15 cents a share for the year. This is compared to a previous forecast of breaking even.

Conversely, shares of Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) plunged more than 27% to $33.52 in heavy trading today. The casual hamburger restaurant reported quarterly earnings yesterday, posting earnings of $6 million, or 36 cents a share, on revenue of $148.6 million. While analysts were expecting 43 cents a share, excluding a charge, the company would have earned 42 cents a share. The company also lowered its forecast for the year.

Red Robin was hit with four downgrades from CIBC, Friedman Billings Ramsey, Bank of America and Bear Stearns. Weakness in new markets and a reduction in earnings growth were cited as reasons for the downgrades.

Symbol Lookup
IndexesChangePrice
DJIA-74.9212,454.83
NASDAQ-1.852,837.53
S&P 500-2.861,317.82

Last updated: May 28, 2012: 10:23 PM

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