Wang & Lee Group board approves 250-to-1 reverse share split
On Monday, Benchmark analyst Todd Brooks reaffirmed a Buy rating and a $12.00 price target for Red Robin Gourmet Burgers (NASDAQ:RRGB), representing significant upside from the current stock price of $2.78. The positive stance comes as the company announced an upcoming CEO transition and provided an update on its first-quarter financial expectations. Red Robin expects its Adjusted EBITDA for the first quarter of 2025 to surpass the previously issued guidance of $18 million to $19 million, though InvestingPro data shows the company faces significant operational challenges with a weak financial health score of 1.4 out of 5.
The current CEO, G.J. Hart, will be succeeded by David Pace, who has a long history in the restaurant industry and was serving as Red Robin’s Chairman of the Board at the time of the announcement. Pace and Hart joined the Red Robin Board simultaneously nearly six years ago. According to Brooks, Pace is well-versed in the company’s strategic initiatives under the North Star brand transformation plan, which has been in progress for over three years. The incoming CEO faces significant challenges, as InvestingPro analysis reveals the company operates with a considerable debt burden of $585 million and a concerning current ratio of 0.52, indicating potential liquidity constraints.
David Pace’s prior leadership roles include CEO positions at Jamba Juice and Tastemaker Acquisition Corp., as well as senior brand management positions at Bloomin’ Brands (NASDAQ:BLMN), none of which are currently rated by Benchmark. Brooks expressed confidence in Pace’s ability to lead Red Robin into the next phase of its transformation, despite the company’s challenging financial position with revenue declining by 4.18% over the last twelve months. The analyst anticipates that Pace will likely place an enhanced focus on the brand’s marketing strategy while continuing to build upon the operational and culinary improvements already established.
The leadership change at Red Robin is set to build on the company’s recent progress, as the outgoing CEO Hart has been instrumental in spearheading the North Star brand transformation. Under Hart’s guidance, the company has worked to leverage its prior efforts and achievements.
The announcement of exceeding first-quarter Adjusted EBITDA forecasts and the CEO transition highlights Red Robin’s ongoing efforts to refine its operations and elevate its brand. With the new leadership of David Pace, the company appears poised to further its strategic goals and potentially enhance its market position.
In other recent news, Red Robin Gourmet Burgers reported a challenging fourth quarter for 2024, with earnings per share (EPS) of -0.94, significantly missing the forecasted -0.29. The company’s revenue for the quarter was $258.2 million, falling short of the expected $285.62 million. Despite these setbacks, Red Robin saw a 3.4% increase in comparable restaurant revenue, indicating some resilience in its operations. Additionally, the company anticipates a 3% increase in first-quarter comparable restaurant sales and expects adjusted EBITDA to surpass the forecasted range of $18 million to $19 million.
In leadership developments, David Pace has taken over as President and CEO, succeeding G.J. Hart, who will remain in an advisory role until September. Analyst firm Craig-Hallum has responded positively to these changes, increasing Red Robin’s stock price target to $11.00 and maintaining a Buy rating. The firm highlighted Pace’s extensive industry experience and past successes, such as his leadership at Jamba Juice. Red Robin has also introduced new menu items and plans to close 10-15 underperforming restaurants in 2025 as part of its strategic initiatives.
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