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JCP Investment partnership increases stake in Red Robin Gourmet Burgers

Published 10/18/2024, 05:12 AM
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JCP Investment Partnership, LP, along with other affiliated entities, has increased its holdings in Red Robin Gourmet (NASDAQ:RRGB) Burgers Inc. (NASDAQ:RRGB), according to a recent SEC filing. The transactions, which took place on October 15 and 16, involved the acquisition of a total of 77,761 shares of Red Robin common stock. The purchases were made at prices ranging from $5.5947 to $5.7936 per share, amounting to a total investment of approximately $450,338.

The filing indicates that the shares were acquired by JCP Investment Partnership, LP and managed accounts of JCP Investment Management, LLC. JCP Investment Partnership, LP, as well as JCP Investment Management, LLC, are part of a Section 13(d) group that collectively holds more than 10% of Red Robin's outstanding shares. James C. Pappas, a managing member of JCP Investment Management, LLC, is also involved in the transactions.

These strategic acquisitions reflect JCP Investment Partnership's continued interest in Red Robin Gourmet Burgers, a company known for its casual dining experience. The purchases add to the firm's existing stake, reinforcing its position as a significant shareholder in the company.

In other recent news, Red Robin Gourmet Burgers announced the resignation of its Chief Technology Officer, Jyoti Lynch, who will be leaving the company to pursue other opportunities. Amidst this transition, Red Robin's Chief Financial Officer, Todd Wilson, will temporarily oversee the technology organization. In recent financial developments, the company reported second-quarter revenue of $300 million, slightly exceeding expectations, but recorded an adjusted loss per share of $0.47.

Analysts from Craig-Hallum and Benchmark have maintained a Buy rating on Red Robin's stock, despite lowering price targets due to increasing food costs and labor expenses. The company has also revised its forecast for fiscal year 2024, now expecting 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.

In addition, Red Robin has amended its credit agreement to revise financial covenants and expand revolver capacity, providing additional flexibility for its ongoing turnaround strategy. These recent developments reflect Red Robin's efforts to navigate current industry pressures and potential future growth.

InvestingPro Insights

JCP Investment Partnership's recent acquisition of Red Robin Gourmet Burgers Inc. (NASDAQ:RRGB) shares comes at a time when the company faces several financial challenges, as highlighted by InvestingPro data and tips.

Despite the recent purchases by JCP Investment Partnership, Red Robin's financial health appears precarious. According to InvestingPro Tips, the company "operates with a significant debt burden" and is "quickly burning through cash." These factors could explain why the stock was available at relatively low prices, ranging from $5.5947 to $5.7936 per share, during the recent transactions.

The company's financial struggles are further evidenced by its negative earnings per share. InvestingPro data shows a diluted EPS (Continuing Operations) of -$2.61 for the last twelve months as of Q2 2024. This aligns with another InvestingPro Tip stating that "analysts do not anticipate the company will be profitable this year."

However, it's worth noting that Red Robin's stock has shown a strong return over the last month, with InvestingPro data indicating a 1-month price total return of 54.79%. This recent uptick might have influenced JCP Investment Partnership's decision to increase its stake in the company.

For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Red Robin Gourmet Burgers, providing a deeper insight into the company's financial situation and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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