One of the leading upscale dining operators,
Ruth's Hospitality Group Inc
) posted fourth quarter 2012 adjusted earnings of 18 cents, way
ahead of the Zacks Consensus Estimate by 3 cents and prior-year
quarter's earnings of 9 cents. The current quarter's earnings
were driven by sales as well as comps growth. In full year 2012,
the company's adjusted earnings were 55 cents per share versus 32
cents per share in the prior year.
On a reported basis, fourth quarter earnings were 10 cents;
ahead of the year-ago quarter's earnings of 4 cents. In 2012, the
company posted a net loss of 58 cents per share versus a net
income of 39 cents per share in the year-earlier period.
Total revenues enhanced 15.5% year over year to $115.1 million
in the quarter, just managed to beat the Zacks Consensus Estimate
of $115 million. In 2012, revenues leaped 7.9% to $398.6
4th Quarter Performance
Company-owned restaurant sales climbed 15.8% to $110.5
million, while franchise income jumped 7.9% to $3.9 million.
During the quarter, comparable restaurant sales at Ruth's
Chris Steak House grew 5.4%, driven by a 1.7% rise in entrées and
a 3.6% upside in average guest check.
Moreover, comparable restaurant sales at Mitchell's Fish
Market crept up 3.4%, benefiting from a 1.9% and 5.4% rise in
average guest check and entrées, respectively. Same-store sales
at franchise-owned restaurant increased 3.4% in the quarter.
During the quarter, restaurant operating expense as a
percentage of restaurant sales, dropped 310 basis points (bps)
year over year to 47.8%, attributable to minimized benefit costs,
increased sales on fixed costs and positive utilities costs. Food
and beverage costs were 31.2%, down 40 bps owing to the rise in
alcohol mix as well as beef pricing and reduced commodity
General and administrative expenses stood at $9.2 million as
against $5.8 million in the year-ago quarter. Operating margin
expanded 110 bps year over year to 4.8% in the reported
During the quarter, the company launched a franchised unit in
Niagara Falls, Canada and a company-owned unit in Cincinnati, OH.
In 2012, the company opened six Ruth's Chris Steak Houses
At the end of 2012, the company had cash and cash equivalents
of 7.9 million and shareholders' equity of $82.4 million.
Long-term debt outstanding at the end of 2012 was $45.0 million,
down from $51.0 million in the previous quarter.
Heathrow, Florida-based, Ruth's provided its full year 2013
outlook. The company expects cost of goods to be 32.5%-33.5% and
marketing and advertising expense to be 3.0% to 3.5%. Restaurant
operating expenses will be within 50.0% and 51.0% and general and
administrative expenses will be $27 million to $28 million.
Capital expenditure for the same period is expected in the range
of $14 million to $16 million and diluted share outstanding
between 35.3 million and 36.0 million.
In 2013, the company is expected to introduce a company-owned
restaurant in Denver, CO and nearly four to five frnachise-owned
units. It is also likely to move its Houston, TX unit in
Moreover, the company has also entered into an agreement to
launch four franchised Ruth's Chris Steak House units in China in
the coming three years.
The company continues to experience higher sales volume and
comps growth. The company also remains focused on expanding its
Ruth's Chris brand, as it continues to perform well. However,
rising commodity cost remains a concern.
Ruth's Hospitality currently retains a Zacks Rank #4 (Sell).
AFC Enterprises Inc.
) recently declared its preliminary fourth quarter and full year
2012 results. The company projects its adjusted earnings per
share for the full year of 2012 to be within $1.23-$1.24, up from
99 cents in 2011. AFC also provided an optimistic outlook for
2013. AFC currently holds a Zacks Rank #2 (Buy).
Other restaurateurs, which are expected to perform well moving
Krispy Kreme Doughnuts, Inc.
Burger King Worldwide, Inc.
). Both carry a Zacks Rank #2 (Buy),
AFC ENTERPRISES (AFCE): Free Stock Analysis
BURGER KING WWD (BKW): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
RUTHS HOSPITLTY (RUTH): Free Stock Analysis
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