As of June 6, 2025, Red Robin Gourmet Burgers Inc's estimated intrinsic value ranges from $0.42 to $78.12 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $26.59 | +338.1% |
| Discounted Cash Flow (5Y) | $9.92 | +63.4% |
| Dividend Discount Model (Multi-Stage) | $0.42 | -93.1% |
| Earnings Power Value | $78.12 | +1187.1% |
Is Red Robin Gourmet Burgers Inc (RRGB) undervalued or overvalued?
With the current market price at $6.07, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Red Robin Gourmet Burgers Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.48 | 2.38 |
| Cost of equity | 10.7% | 18.2% |
| Cost of debt | 7.0% | 9.4% |
| Tax rate | 0.7% | 1.1% |
| Debt/Equity ratio | 3.39 | 3.39 |
| After-tax WACC | 7.8% | 11.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $10 | $260M | 95.8% |
| 10-Year Growth | $27 | $442M | 69.9% |
| 5-Year EBITDA | $23 | $407M | 97.3% |
| 10-Year EBITDA | $32 | $498M | 73.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $93M |
| Discount Rate (WACC) | 11.4% - 7.8% |
| Enterprise Value | $820M - $1,194M |
| Net Debt | $151M |
| Equity Value | $669M - $1,043M |
| Outstanding Shares | 11M |
| Fair Value | $61 - $95 |
| Selected Fair Value | $78.12 |
| Metric | Value |
|---|---|
| Market Capitalization | $66M |
| Enterprise Value | $217M |
| Trailing P/E | 0.00 |
| Forward P/E | 0.00 |
| Trailing EV/EBITDA | 9.70 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 3.39 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $7.98 |
| Discounted Cash Flow (5Y) | 29% | $2.48 |
| Dividend Discount Model (Multi-Stage) | 24% | $0.08 |
| Earnings Power Value | 12% | $7.81 |
| Weighted Average | 100% | $21.59 |
Based on our comprehensive valuation analysis, Red Robin Gourmet Burgers Inc's weighted average intrinsic value is $21.59, which is approximately 255.7% above the current market price of $6.07.
Key investment considerations:
Given these factors, we believe Red Robin Gourmet Burgers Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.