RRGB

We rate RED ROBIN GOURMET BURGERS INC (RRGB) as Avoid with a composite score of 35.0/100 at a current price of $3.71. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in quality (45th percentile) and value (36th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (23th percentile) and investment (33th percentile) tempers our overall conviction. We assign a No Moat rating (21/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

RED ROBIN GOURMET BURGERS INC holds a top-quartile position (#0 of 50) within the Retail Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 35.0/100 places it at rank #4109 in our full 7,333-stock universe. At $128M in market capitalization, RED ROBIN GOURMET BURGERS INC is a small-cap player in the Retail Trade space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -12% combined with momentum at the 23th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 48% (+11.8pp vs sector) narrow to operating margins of -1% (-4.8pp vs sector) and net margins of -3.0%, yielding a gross-to-net conversion rate of -6%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $3.71, RED ROBIN GOURMET BURGERS INC is trading at a premium to fundamental value. Our value factor score of 36/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at P/S of 0.1x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to RED ROBIN GOURMET BURGERS INC. The stock presents a balanced risk profile: current negative profitability (net margin -3.0%) and below-average price stability (35th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: current negative profitability (net margin -3.0%); below-average price stability (35th percentile); low beta of 0.62 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 35th percentile and quality factor at the 45th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 48% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate RED ROBIN GOURMET BURGERS INC's capital allocation as Poor. Key concerns include negative profitability, weak asset returns (ROA -5.6%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — RED ROBIN GOURMET BURGERS INC significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, RED ROBIN GOURMET BURGERS INC receives a Avoid rating with a composite score of 35.0/100 (rank #4109 of 7,333). Our quantitative framework assigns a No Moat (21/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 34/100.

Our analysis does not support a constructive view on RED ROBIN GOURMET BURGERS INC at this time. The combination of limited competitive advantages, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.