Jumana Capital Investments LLC, along with Christopher R. Martin, recently reported the acquisition of additional shares in Red Robin Gourmet (NASDAQ:RRGB) Burgers Inc (NASDAQ:RRGB). According to the SEC filing, the transactions occurred on November 5 and November 7, 2024, involving the purchase of a total of 45,250 shares of Red Robin's common stock. The shares were acquired at prices ranging from $5.1834 to $5.99 per share, resulting in a total value of approximately $234,750.
Following these transactions, Jumana Capital now holds a total of 814,452 shares in the company. The purchases were made directly by Jumana Capital, with Mr. Martin, as the manager, potentially being deemed to beneficially own the shares. The filing also notes that both Jumana Capital and Mr. Martin are part of a Section 13(d) group, which collectively owns more than 10% of Red Robin's outstanding shares.
In other recent news, Red Robin Gourmet Burgers has been a subject of discussion among analysts at Craig-Hallum and Benchmark, following mixed revenue results and a downward revision of its earnings guidance. Despite facing higher labor costs and general and administrative expenses that led to weaker margins, the company reported solid same-store sales and total sales in Q3. However, these developments prompted a revision in the company's price target, now set at $8.50, a decrease from the previous $11.50, while the Buy rating on the stock remains unchanged.
Additionally, Red Robin's management has revised its adjusted EBITDA guidance downward, anticipating continued margin pressures in the fourth quarter. The company has also amended its credit agreement, increasing its revolving credit facility and providing some covenant relief. Amid these developments, Red Robin's Chief Technology Officer, Jyoti Lynch, resigned from her position to explore new opportunities.
In terms of financial performance, the company reported second-quarter revenue of $300 million, slightly surpassing expectations, but recorded an adjusted loss per share of $0.47, missing analyst estimates. For fiscal year 2024, Red Robin now expects adjusted EBITDA to be between $40 million and $45 million, and total revenue of approximately $1.25 billion. Despite these challenges, Red Robin has reported improvements in guest satisfaction and loyalty program membership, which could potentially enhance future same-store sales.
InvestingPro Insights
The recent share acquisition by Jumana Capital Investments LLC in Red Robin Gourmet Burgers Inc (NASDAQ:RRGB) comes at a time when the company faces significant financial challenges. According to InvestingPro data, Red Robin's market capitalization stands at a modest $81.29 million, reflecting the company's current struggles.
InvestingPro Tips highlight that Red Robin is "quickly burning through cash" and "operates with a significant debt burden." These factors may explain the company's attractiveness to value investors like Jumana Capital, who might see potential for turnaround despite the current financial strain.
The company's revenue for the last twelve months as of Q3 2023 was $1.27 billion, with a concerning revenue growth of -0.88%. This aligns with another InvestingPro Tip indicating that "net income is expected to drop this year." The gross profit margin of 12.97% further underscores the challenges Red Robin faces in maintaining profitability in the competitive restaurant industry.
It's worth noting that Red Robin's stock has taken a significant hit, with a -33.16% price total return over the past six months. This decline might have presented an opportunity for Jumana Capital to increase its stake at a lower valuation.
Investors considering following Jumana Capital's move should be aware that InvestingPro lists 13 additional tips for Red Robin, providing a more comprehensive view of the company's financial health and market position. These insights could be valuable for those looking to make informed investment decisions in the restaurant sector.
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