Joshua Wilson, general counsel at Red Robin Gourmet Burgers (RRBG), recently added 10,000 shares. The buy increased his holdings by 22 percent, and came to a total cost of $112,250.
He was joined by the company’s Chief People Officer, who bought 1,751 shares for just under $20,000 a few days before, increasing his holdings by 11 percent. Overall, company insiders have been steady buyers of shares over the past 18 months, with the last insider sale occurring in May 2021.
Overall, insiders own 4.8 percent of the burger chain.
Shares of RRBG have been knocked down 11 percent in the past year, about in-line with the overall stock market. A challenging environment for the restaurant industry has led to a rise of just 2.4 percent in revenues, while the company reported a decline in earnings.
While shares look inexpensive at 0.14 times their price to sales, it’s uncertain when Red Robin will return to profitability.
Action to take: With only modest insider buying here, and without the company paying a dividend, investors may want to stick with bigger, dividend-paying companies in the industry. For now, shares are likely to continue to underperform the overall market.
For traders, the June $10 puts, last going for about $0.90, can likely deliver mid-double-digit returns on a continued move lower for shares. Traders should look to take quick profits given the current market volatility.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.