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Ruby Tuesday (RT) to Report Q4 Earnings: What to Expect? - Analyst Blog

Tennessee-based casual dining restaurant chain, Ruby Tuesday, Inc.RT , is set to report fiscal fourth-quarter and 2015 results on Jul 23, after the market closes. Last quarter, it posted a positive earnings surprise of 83.33%. The company presently has an average positive earnings surprise of 24.63% over the trailing four quarters. Let's see how things are shaping up for this announcement.

Factors to Consider

Ruby Tuesday is aggressively pursuing its brand transformation efforts. From offering new menu to limited time offers, executing marketing campaigns, and re-imaging its restaurants, the company is leaving no stone unturned to satisfy its customers and return to profits. The company has not been able to post profits consistently over the past three quarters. Comps and revenues have remained sluggish on negative guest counts. However, based on its sales initiatives, the company expects fourth-quarter comps in the range of flat to down low single digits compared to a decline of 0.3% in the third quarter.

Meanwhile, the company has been successful in reducing its costs and improving its margins on brand transformation efforts that have lowered marketing expenses. Additionally, Ruby Tuesday's strategy to exit its non-core brands and shut down underperforming stores is helping it to lower operating costs. These initiatives and efforts to boost comps while reducing costs would aid the company's results in the soon-to-be reported quarter.

However, like every other restaurant chain, inflationary cost pressure is expected to take a toll on profits. Moreover, soft consumer spending environment and intense competition in the casual dining sector would hurt the top line in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Ruby Tuesday is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 11 cents. Hence, the difference is 0.00%.

Zacks Rank: Ruby Tuesday currently carries a Zacks Rank #2 (Buy), which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are a few companies in the restaurant industry which have a favorable Zacks Rank and a positive Earnings ESP and are therefore likely to beat earnings:

Jack in the Box Inc. JACK with an Earnings ESP of +2.74% and a Zacks Rank #1 (Strong Buy).

Dave & Buster's Entertainment, Inc. PLAY with an Earnings ESP of +4.55% and a Zacks Rank #1.

BJ's Restaurants, Inc. BJRI with an Earnings ESP of +2.56% and a Zacks Rank #3 (Hold).

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BJ'S RESTAURANT (BJRI): Free Stock Analysis Report

RUBY TUESDAY (RT): Free Stock Analysis Report

JACK IN THE BOX (JACK): Free Stock Analysis Report

DAVE&BUSTRS ENT (PLAY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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