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Ruth's Hospitality Group Inc.

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Msg  35 of 39  at  7/26/2008 4:26:57 PM  by


RUTH valuation

Looks like buying some shares on July 17th may have caught the bottom. We had a thread going about RUTH over on the ARO board that I copied over here. I'm thinking RUTH will run to $7 in the next 2 months, so load up right?

view thread, thread start In response to msg 4839 by countrydog

Recs: 0 Re: Hey Fee/RUTH
My interest in RUTH is valuation, valuation, valuation. I also agree with your comment.

RUTH is down about 76%, its peer group down 43%. However, on p/e current year peer's about 15.2 with RUTH at 7.4, next year's peer about 13.3 with RUTH at 6.1. (i.e RUTH could double to $7 and just meet its peers). RUTH still has positive earnings, but is priced like they are posting losses. I do not know that much about the seafood restaurants they acquired. Ruth's cost of meats have risen, but should moderate I would think.

Most of the business is corporate and special occassion meals. Those really in the credit crunch, subprime are probably not RUTH's clients. Maybe some have foregone the special occasion meals recently with higher costs like gas, insurance, food. I think the FED will raise interest rates later this year to curb off inflation and people will settle in if prices stabalize and then they will return to their old habits. Higher end folks will still dine out. Personally, I have been to most of the high end steak houses like Capital Grille, Smith and Lewinsky, Mortons and also Ruth's. By far my wife and I enjoy Ruth's Chris quality and service better than the rest.

S&P upgraded RUTH from 2 stars to 3 stars (from sell to hold) 7/15/08 and maintained the $5 price target based on .45-.50 earnings in 2008. Ford equity research also upgraded RUTH on 7/5/08.

If you follow this board, I have bought RUTH a few times during the steep decline, but I have cut losses and sold. I thought is was going to channel trade between 7-8 and it did for awhile. Fortunately, I was not caught long when it broke south of 7. I put my new entry at 5.50 thinking if they could make .55 earnings at 10 times that would still be a discounted valuation. Last month I bought 1k shares at 5.50, but sold at $5. It dropped really hard the next week. I have lost very little considering how dramatically it has fallen. I watch the volume and noticed it had 2 straight days over 1 million shares which I thought might be the final capitulation sell off. Today, I saw over 200k share trade around 11 am and decided to go in again immediately for 2k shares this time 3.55. Just after 1pm, I saw another spike of 400k shares trade in a matter of moments and then it started moving up so I added 1,500 more shares. I have 1k trading and 2,500 in the IRA. Bigger than normal volume. There may be some short covering going on here also.

It may just another head fake, but if not, I will look like a caught a nice snapper today.

Nice to see you back posting.

Profit On!

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