Ruby Tuesday, Inc. (RT) continued its earnings surprise winning streak in July when it beat for the fourth consecutive quarter despite a volatile economic environment for the casual dining chains as consumers stay home to eat.
The company also continues with its expansion plans as it announced on Aug 17 that it was expanding in Hawaii by adding 3 new restaurants over the next 3 years, with the first to open in June 2011.
It also intends to open 8 to 13 restaurants in fiscal 2011, which it just entered, and 10 of those will be international locations.
Ruby Tuesday Surprised by 17.9% in the Fiscal Fourth Quarter
On July 22, Ruby Tuesday reported its fiscal fourth quarter 2010 results and beat the consensus by 5 cents.
Earnings per share were 33 cents compared to the consensus of 28 cents. The company saw a loss of 35 cents in the same quarter last year.
Same store sales rose 0.3% at company-owned restaurants and fell 0.5% for domestic franchised restaurants.
The same store sales increase was the best for the company in the last 16 quarters which indicates its strategy for coping with the global recession appears to be working. Ruby Tuesday also reduced its debt by $33 million in the quarter.
Outlook Still Uncertain
The casual dining chains have been in a tough position during the last several years. But they have cut costs, re-tooled menus and price points, focused on updating restaurant locations and it seems to be paying off heading into this recovery.
Ruby Tuesday said it has momentum going into fiscal 2011, but that the economy was still “vulnerable.”
The company is conservatively projecting same store restaurant sales at flat to up 2% for fiscal 2011.
Double Digit Earnings Growth Projected for Fiscal 2011
The analysts are projecting further growth in 2011. The Zacks Consensus Estimate for fiscal 2011 has been holding at 85 cents per share but this is earnings growth of 16.4% over fiscal 2011.
Analysts also see Ruby Tuesday growing earnings another 17.6% in fiscal 2012.
The company will report fiscal first quarter 2011 results on Oct 7.
Ruby Tuesday Remains a Value Stock
I last reviewed Ruby Tuesday in May 2009 and at that time the company was fighting through “the most difficult operating environment” in the founder’s entire career. What a difference a year makes.
It was trading at 11x forward estimates in 2009. Today, it is slightly more expensive, at 12.9x forward estimates, but that is under its peers who are at 15.9x.
The company also has an excellent price-to-book ratio of 1.3, again, under its peers at 2.9 and well-within the value parameters as its under 3.0.
Ruby Tuesday is a Zacks #2 Rank (buy) stock.
Read the May 15, 2009 article.
Update to Previous Value Zacks Rank Buy Stocks
ZST Digital Networks, Inc. (ZSTN) is a dirt cheap Chinese stock, trading at just 3.8x forward estimates. Read the full article.
Textainer Group Holdings Limited (TGH) recently surprised on the Zacks Consensus Estimate by 18% as the worldwide shortage of containers continues to boost the bottom line. Read the full article.
Thompson Creek Metals Company Inc. (TC) is trading at just 9.7x forward estimates as molybdenum prices recovered from the price plunge during the recession. Read the full article.
Prestige Brands Holdings Inc. (PBH) has surprised on the Zacks Consensus Estimate 3 out of the last 4 quarters. Read the full article.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
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