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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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
-
Dow Hits a Record High After December Jobs Report: Stock Market TodayThe S&P 500 also closed the week at its highest level on record, thanks to strong gains for Intel and Vistra.
-
Is Home Insurance Tax Deductible?With home insurance rates on the rise, you might be hoping to at least claim the cost as a tax deduction. Here's what you need to know ahead of tax season.
-
The December Jobs Report Is Out. Here's What It Means for the Next Fed MeetingThe December jobs report signaled a sluggish labor market, but it's not weak enough for the Fed to cut rates later this month.
-
If You'd Put $1,000 Into Lowe's Stock 20 Years Ago, Here's What You'd Have TodayLowe's stock has delivered disappointing returns recently, but it's been a great holding for truly patient investors.
-
If You'd Put $1,000 Into 3M Stock 20 Years Ago, Here's What You'd Have TodayMMM stock has been a pit of despair for truly long-term shareholders.
-
If You'd Put $1,000 Into Coca-Cola Stock 20 Years Ago, Here's What You'd Have TodayEven with its reliable dividend growth and generous stock buybacks, Coca-Cola has underperformed the broad market in the long term.
-
If You Put $1,000 into Qualcomm Stock 20 Years Ago, Here's What You Would Have TodayQualcomm stock has been a big disappointment for truly long-term investors.
-
If You'd Put $1,000 Into Home Depot Stock 20 Years Ago, Here's What You'd Have TodayHome Depot stock has been a buy-and-hold banger for truly long-term investors.
-
What the Rich Know About Investing That You Don'tPeople like Warren Buffett become people like Warren Buffett by following basic rules and being disciplined. Here's how to accumulate real wealth.
-
If You'd Put $1,000 Into Bank of America Stock 20 Years Ago, Here's What You'd Have TodayBank of America stock has been a massive buy-and-hold bust.
-
If You'd Put $1,000 Into Oracle Stock 20 Years Ago, Here's What You'd Have TodayORCL Oracle stock has been an outstanding buy-and-hold bet for decades.
