Although the consumer is still relatively strong, the restaurant
sector has been pretty mixed lately. Some companies have been able
to do quite well in this environment, and see their share prices
surge, while others, such as
Ruby Tuesday's (
have definitely struggled.
Ruby Tuesday's in Focus
Ruby Tuesday's is best known for its lineup of casual dining
restaurants under the Ruby Tuesday brand name. The firm has about
800 restaurants in total, including several dozen international
locations as well.
Ruby Tuesday's saw strong growth and was a consumer darling leading
up to the financial crisis-thanks in large part to their solid menu
and salad bar-but it hasn't really recovered from the Great
Recession. The stock is flat over the past five years, while
have seen strong gains.
While the others have adapted to changing consumer tastes and have
managed to expand operations, Ruby Tuesday's has stagnated and now
its earnings picture is in trouble.
RT Earnings in Focus
Ruby Tuesday's has a pretty terrible track record when it comes to
earnings season. The company has missed estimates in two of the
last four quarters, and both misses were by more than -30%. The
last quarter was especially poor, as the company missed
expectations and posted earnings that were less than the year ago
Revenues were also weak for the quarter, as these slumped by about
-4.6% (yoy). These also missed estimates, further showcasing the
sluggishness in RT lately.
Thanks to this decline and concerns over the company's near term
future, analysts tracking the stock have been slashing their
estimates for RT's future. In fact, estimates for the current
quarter have fallen from seven cents a share 60 days ago to
negative four cents a share today. The current year figures aren't
any better, as these estimates have slumped from 36 cents a share
two months ago, to just eight cents a share today.
Clearly, the prospects are quite poor for RT in both the near term
and the long term. Thanks to this, we have assigned Ruby Tuesday's
a Zacks Rank #5 (Strong Sell), and are looking for the company to
underperform in the months ahead too.
If investors are dead-set on investing in the restaurant sector,
there are several better choices available. While there are no #1
Ranked stocks at this time, there are a handful of #2 Ranked
securities, any of which could be solid choices in this market
AFC Enterprises (
Domino's Pizza (
Famous Dave's (
, could be intriguing picks. That is because, not only do all of
these have Zacks Ranks of 2, but they have seen their ranks surge
from hold ranks (or worse) into buy territory in just the past
week, suggesting now could be the time to give these companies a
closer look, especially when compared to the chronic underperformer
of Ruby Tuesday's.
Want the latest recommendations from Zacks Investment Research?
Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>
AFC ENTERPRISES (AFCE): Free Stock Analysis
FAMOUS DAVES (DAVE): Free Stock Analysis Report
DOMINOS PIZZA (DPZ): Free Stock Analysis Report
DARDEN RESTRNT (DRI): Free Stock Analysis
MCDONALDS CORP (MCD): Free Stock Analysis
RUBY TUESDAY (RT): Free Stock Analysis Report
To read this article on Zacks.com click here.