Should Ruby Tuesday Investors Remain Hopeful?

With shares of Ruby Tuesday (NYSE:RT) trading at around $8.31, is RT an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

earnings-header-clean-300Ruby Tuesday closed at $8.31 yesterday, but dropped to $7.62 after hours. This was due to worse than expected earnings results. Revenue came in at $304 million. The expectation was for $305 million. This also represents a drop of 1 percent revenue drop YoY. EPS came in at -$0.07 versus an expected -$0.06. Same-store sales increased 0.30 percent. Guidance was lowered. The original EPS expectation for FY2013 was $0.24 to $0.34. That has been lowered to a range of $0.24 to $0.30. Same-store sales are also expected to be flat, which hasn’t generated much excitement from investors.

Ruby Tuesday plans to open between 12 and 14 restaurants in 2013, the majority of them overseas. However, there will be more closings than openings. Planned closings include four to five Ruby Tuesday restaurants, all Marlin & Ray restaurants, one Wok Hay restaurant, and two Lime Fresh restaurants. The company is also seeking a buyer for Truffles. In additional news, Ruby Tuesday will expand its repurchase program by 10 million shares.

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It might be difficult to get a read on the Ruby Tuesday situation based on the information above. Let’s take a look at some important numbers so we can get a better view of the big picture.