The firm said it lowered its price target based on the highly competitive traditional bar-and-grill sector.
UBS maintained its "neutral" rating on the restaurant chain.
Shares of Ruby Tuesday are down by -0.16% to $6.16 in pre-market trading today.
Separately, TheStreet Ratings team rates RUBY TUESDAY INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate RUBY TUESDAY INC (RT) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, RUBY TUESDAY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for RUBY TUESDAY INC is currently extremely low, coming in at 14.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.13% is significantly below that of the industry average.
- In its most recent trading session, RT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.8%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that RT's debt-to-equity ratio is low, the quick ratio, which is currently 0.51, displays a potential problem in covering short-term cash needs.
- You can view the full analysis from the report here: RT Ratings Report