Ruth’s Hospitality Group is a Zacks Rank #1 (Strong Buy) that develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name.
After the company saw a big earnings beat back in May, the stock has struggled to gain any momentum. Investors are now wondering if the stock is stuck or if next quarter can show better performance. With the reopening in full swing and earnings estimates ticking higher the bulls should have faith in what Ruth’s has cooking.
About the Company
Ruth’s Hospitality employs over 2,600 and is headquartered in Winter Park, FL. The company was founded in 1965 and now operates over 150 Ruth's Chris Steak House locations worldwide specializing in USDA Prime grade steaks.
RUTH is valued at $800 million and has a Forward PE of 21. The company holds a Zacks Style Score of “D” in Value, but “A” in Momentum and a “B” in Growth.
Q1 Earnings and Price Action
In early May, Ruth’s reported a large EPS beat that sent the stock higher on the headline number. Q1 came in at $0.26 v the $.10 expected and revenues came in at $87.3M v the $86.7M expected. While EPS was great, the revenues weren’t as impressive and after a spike to 2021 highs, the stock fell to April lows.
While Ruth’s didn’t offer FY21 guidance the company sees capex at $20-25M. CEO Cheryl Henry had a positive outlook on the conference call:
“With dining rooms now open in nearly all of our restaurants and our improved financial position, we are focusing our efforts on growing sales and cash flow, building upon the digital foundation we’ve developed during the last year, and investing in new unit growth. This includes two to three new restaurants this year and an additional three to four planned for 2022. I’m optimistic about the future and confident that our iconic brand and our talented team members have us well positioned for growth.”
When you compare the numbers to 2019, RUTH saw sales increase 2.7%. This despite three markets (Boston, Hawaii and Manhattan) seeing continued challenges with local restrictions.
The EPS beat was the fourth straight and the company will now look to make it five in a row on August 8th.
Estimates Headed Higher
The earnings momentum should continue as we head into next quarter. We will talk about the reopening in a moment, but for now, let’s discuss the rising estimates.
For the current quarter, we see a 10% jump, with numbers rising from $0.09 to $0.10 over the last 60 days.
For the current year, we see an 81% rise over that same time frame. Analysts have taken their numbers up from $0.59 to $1.07 as economies continue to make progress towards fully being open.
The Reopening and Same Store Sales
Like many restaurants, RUTH’s was hit by the pandemic and the restrictions put in place. However, now they find themselves in a pent-up demand situation where people are craving to go out. This is giving the company a tailwind as we head into the back half of the year.
We see evidence in this after May same store sales numbers were released in late June, showing a 6% move higher when compared to 2019. June was 2.1%, so we can see the uptick the month difference makes and we would expect that to continue into the earnings report.
The Technical Take
The stock had a great rally off the COVID lows, going from $6 to $28 after the most recent earnings. The stock has been stuck since, slowly grinding lower below the 50-day moving average.
A bullish EPS number would likely help the stock blast through resistance and make new all-time highs. For those looking to buy the dip, watch the $19.50 area, which is where the 200-day moving average resides.
In Summary
As economies fully reopen RUTH’s and other fine dining restaurants are poised to benefit from the pent-up demand. There is no telling how long that will last, but looking at the SSS numbers, we see this momentum is just getting started.
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Bull of the Day: Ruths Hospitality Group (RUTH)
Ruth’s Hospitality Group is a Zacks Rank #1 (Strong Buy) that develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name.
After the company saw a big earnings beat back in May, the stock has struggled to gain any momentum. Investors are now wondering if the stock is stuck or if next quarter can show better performance. With the reopening in full swing and earnings estimates ticking higher the bulls should have faith in what Ruth’s has cooking.
About the Company
Ruth’s Hospitality employs over 2,600 and is headquartered in Winter Park, FL. The company was founded in 1965 and now operates over 150 Ruth's Chris Steak House locations worldwide specializing in USDA Prime grade steaks.
RUTH is valued at $800 million and has a Forward PE of 21. The company holds a Zacks Style Score of “D” in Value, but “A” in Momentum and a “B” in Growth.
Q1 Earnings and Price Action
In early May, Ruth’s reported a large EPS beat that sent the stock higher on the headline number. Q1 came in at $0.26 v the $.10 expected and revenues came in at $87.3M v the $86.7M expected. While EPS was great, the revenues weren’t as impressive and after a spike to 2021 highs, the stock fell to April lows.
While Ruth’s didn’t offer FY21 guidance the company sees capex at $20-25M. CEO Cheryl Henry had a positive outlook on the conference call:
“With dining rooms now open in nearly all of our restaurants and our improved financial position, we are focusing our efforts on growing sales and cash flow, building upon the digital foundation we’ve developed during the last year, and investing in new unit growth. This includes two to three new restaurants this year and an additional three to four planned for 2022. I’m optimistic about the future and confident that our iconic brand and our talented team members have us well positioned for growth.”
When you compare the numbers to 2019, RUTH saw sales increase 2.7%. This despite three markets (Boston, Hawaii and Manhattan) seeing continued challenges with local restrictions.
The EPS beat was the fourth straight and the company will now look to make it five in a row on August 8th.
Ruths Hospitality Group, Inc. Price and Consensus
Ruths Hospitality Group, Inc. price-consensus-chart | Ruths Hospitality Group, Inc. Quote
Estimates Headed Higher
The earnings momentum should continue as we head into next quarter. We will talk about the reopening in a moment, but for now, let’s discuss the rising estimates.
For the current quarter, we see a 10% jump, with numbers rising from $0.09 to $0.10 over the last 60 days.
For the current year, we see an 81% rise over that same time frame. Analysts have taken their numbers up from $0.59 to $1.07 as economies continue to make progress towards fully being open.
The Reopening and Same Store Sales
Like many restaurants, RUTH’s was hit by the pandemic and the restrictions put in place. However, now they find themselves in a pent-up demand situation where people are craving to go out. This is giving the company a tailwind as we head into the back half of the year.
We see evidence in this after May same store sales numbers were released in late June, showing a 6% move higher when compared to 2019. June was 2.1%, so we can see the uptick the month difference makes and we would expect that to continue into the earnings report.
The Technical Take
The stock had a great rally off the COVID lows, going from $6 to $28 after the most recent earnings. The stock has been stuck since, slowly grinding lower below the 50-day moving average.
A bullish EPS number would likely help the stock blast through resistance and make new all-time highs. For those looking to buy the dip, watch the $19.50 area, which is where the 200-day moving average resides.
In Summary
As economies fully reopen RUTH’s and other fine dining restaurants are poised to benefit from the pent-up demand. There is no telling how long that will last, but looking at the SSS numbers, we see this momentum is just getting started.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>