Carnivors hungry for a high-quality steak appreciate the tender cuts served at Ruth's Chris Steak House. Now some analysts say that the retaurant chain's stock, which went public last August, is looking tasty, too.
Founded as a single restaurant in New Orleans in 1965, Ruth's Chris has grown into the largest high-end steak house chain in the U.S., with about 90 locations worldwide. (The company owns slightly less than half of the restaurants; the rest are franchised.) Hurricanes Katrina and Wilma dealt a tough blow to Ruth's last fall, damaging some of its restaurants and prompting management to move headquarters to Orlando.
But the corporate transition is now finished, and the company is ready for growth, according to analyst Peter Oakes of Piper Jaffray. Oakes says the company generated solid sales in the fourth quarter. Sales grew 8.5% at company-owned locations open at least one year, and 8% at franchised locations. The company said Tuesday that it expects same-store sales to grow between 4.5% and 5.5% in 2006, higher than its previous forecast of 3% to 4%. That Ruth's caters to an affluent crowd bodes well, in Oakes's view, because high-end customers aren't as sensitive to the ups and downs of the economy as diners at mainstream casual restaurants are.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Cowen Co. analyst Paul Westra also likes the stock (symbol RUTH). He sees plenty of room for Ruth's Chris to expand to additional markets and says that its proven brand, strong management team and appeal to a wide range of customers should keep it "the undisputed leader" in the fast-growing fine-dining business. He thinks the company could eventually open more than 300 new locations.
The stock has been volatile. After debuting at $20, the shares fell to $16 in mid November. They've since recovered to $22, as of Wednesday, or 26 times the 86 cents per share that analysts expect the company to earn in 2006. Westra figures that the stock is worth $28.
--Lisa Dixon
-
The Three Financial Questions Every Retiree Asks (or Should)Unless you can answer these three important questions, you may be at risk for the biggest retirement worry there is: Running out of money.
-
Stock Market Today: The Dow Leads an Up Day for StocksBoeing, American Express and Nike were the best Dow stocks to close out the week.
-
Why Is Warren Buffett Selling So Much Stock?Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
-
Fed Cuts Rates Again: What the Experts Are SayingFederal Reserve The central bank continued to ease, but a new administration in Washington clouds the outlook for future policy moves.
-
If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have TodayGoogle parent Alphabet has been a market-beating machine for ages.
-
Fed Goes Big With First Rate Cut: What the Experts Are Saying
Federal Reserve A slowing labor market prompted the Fed to start with a jumbo-sized reduction to borrowing costs.
-
Stock Market Today: Stocks Retreat Ahead of Nvidia EarningsMarkets lost ground on light volume Wednesday as traders keyed on AI bellwether Nvidia earnings after the close.
-
Stock Market Today: Stocks Edge Higher With Nvidia Earnings in FocusNvidia stock gained ground ahead of tomorrow's after-the-close earnings event, while Super Micro Computer got hit by a short seller report.
-
Stock Market Today: Dow Hits New Record Closing HighThe Nasdaq Composite and S&P 500 finished in the red as semiconductor stocks struggled.
-
Stock Market Today: Stocks Pop After Powell's Jackson Hole SpeechFed Chair Powell's Jackson Hole speech struck a dovish tone which sent stocks soaring Friday.
