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October 14, 2010
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Ted Davenport and Rick Nakashima, the two principal investors in the company, who will also invest in this venture, currently own and operate 4 Ruby Tuesday restaurants in Honolulu, Mililani and Kaneohe and with the opening of three additional restaurants in Hawaii, the total number of their owned restaurants will increase to 7.
We believe expansion of Ruby Tuesday in Hawaii through franchising reduces its capital requirement. Additionally, free cash flow will continue to grow, leaving room to reinvest in increasing brand recognition and enhancing shareholders’ return.
The company recently announced its first quarter 2011 adjusted earnings per share of 17 cents, which surpassed the Zacks Consensus Estimate by 1 cent. During the quarter, same-restaurant sales for company-owned restaurants rose 1.2% from the prior-year quarter and inched up 0.4% at domestic franchised restaurants.
Ruby Tuesday expects fiscal 2011 same-store sales for company-owned restaurants in a range of flat to positive 2% and earnings estimate is expected to be in a range of 76 cents to 86 cents per share.
In fiscal 2011, the company plans to open 8 to 13 franchised restaurants, out of which 10 will be international. However, it plans to open only one to two company-owned restaurants in 2011.
Ruby Tuesday currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
Ruby Tuesday’s primary competitors are Jack in the Box Inc. (JACK) and Biglari Holdings Inc. (BH). For both the stocks, we have a Zacks #1 Rank (short-term Strong Buy recommendation).
Based in Maryville, Tennessee, Ruby Tuesday has company-owned and franchised restaurants in 46 states, the District of Columbia, Guam and 14 foreign countries. The company is led by its founder Sandy Beall.
Read the full analyst report on "RT"
Read the full analyst report on "JACK"
Read the full analyst report on "BH"
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