Buy Red Robin Gourmet Burgers If The Company Announces It Is Willing To Sell

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About: Red Robin Gourmet Burgers, Inc. (RRGB)
by: Saint Fleur Investment Research
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Saint Fleur Investment Research
Short only, Growth, long-term horizon
Summary

The company's business strategy is based on quality, service, and value; with highly customizable burgers, quick delivery, and the price ranging from $6.99 to $15.49.

Red Robin Gourmet received an offer to buy the company for $40 per share, but it was rejected by the Board of Directors.

If we use the 2020 EBITDA of $102 million, the company trades at 5x 2020 EBITDA.

With an EBITDA margin of ~7-8%, thin operating profits, and 5% interest rates, we would not buy shares right now.

If the company decides to find another buyer and hires a financial advisor, Red Robin's share price could increase quite a bit, perhaps to more than $40.

Red Robin Gourmet Burgers (RRGB) received an offer of $40, which was rejected by the Board of Directors. The current EBITDA margin and the company's interest expenses make reporting positive net income very