Investment Thesis
Red Robin faces acute financial distress with negative stockholders' equity (-$106.3M), inability to service debt (0.1x interest coverage), and critical liquidity constraints (0.45x current ratio). The company is unprofitable with declining revenues, and minimal free cash flow cannot sustain a $170.2M debt burden, creating material bankruptcy risk.
Strengths
- Positive operating cash flow of $37.0M indicates underlying business can generate cash despite losses
- Maintains $1.2B revenue base with established brand and operational scale
- Net income improved 70% YoY suggesting management actions are moving company toward profitability
Risks
- Negative shareholders' equity of -$106.3M indicates technical insolvency and balance sheet inversion
- Interest coverage of 0.1x - operating income cannot service debt, creating default risk
- Current ratio of 0.45x signals inability to meet short-term obligations without additional liquidity
- Revenue declining 3.1% YoY while company remains deeply unprofitable with -1.9% net margin
- Free cash flow of $6.2M cannot service $170.2M long-term debt; refinancing/restructuring likely required
- Quick ratio of 0.32x and only $19.9M cash on hand exacerbates liquidity vulnerability
Key Metrics to Watch
- Debt restructuring announcements or covenant violations
- Quarterly path to operating profitability and positive operating margins
- Free cash flow sustainability and operating cash flow trends
- Current ratio improvement and working capital management
- Revenue stabilization and comp store sales performance
- Interest coverage ratio progression toward minimum 1.0x servicing threshold
Financial Metrics
Revenue
1.2B
Net Income
-23.3M
EPS (Diluted)
$-1.31
Free Cash Flow
6.2M
Total Assets
563.5M
Cash
19.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
0.2%
Net Margin
-1.9%
ROE
N/A
ROA
-4.1%
FCF Margin
0.5%
Balance Sheet & Liquidity
Current Ratio
0.45x
Quick Ratio
0.32x
Debt/Equity
N/A
Debt/Assets
118.9%
Interest Coverage
0.14x
Long-term Debt
170.2M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-15T02:54:26.245674 |
Data as of: 2025-12-28 |
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