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Ruth's Chris Steak House
is scheduled to report first-quarter 2006 results after the close on April 24. The Street is expecting RUTH to earn 26 cents on net revenue of $64.76 million.
On the previous earnings call, management guided to first-quarter EPS in the range of 24 cents to 26 cents, and the Street is betting heavily on the high end of expectations. The interesting fact is that EPS for second-quarter 2006 is expected to be down significantly on a sequential basis to 19 cents.
In the fourth quarter of 2005, RUTH earned 21 cents, bettering Street estimates of 19 cents on very strong sales and comps. When I covered the previous earnings call, I set a target of $25 to $27 for RUTH. Subsequent to that, I sold the stock at just over $24.
Frankly, with the first-quarter spate of restaurant IPOs, I just thought that some momentum would fall out of RUTH. Indeed it has, with the stock now trading nearly 7% lower from where we made our sale. This is good because, on a fundamental basis, I still like RUTH.
The impact of last year's devastating hurricanes is now fully in the rearview mirror. Management performed supremely in the face of adversity and uncertainty. Growth is going to continue, especially outside of the U.S., and commodity food costs are continuing to show signs of declines from last year's peaks. Let's see how today's earnings report and conference call pan out before setting a trading strategy going forward.
At the time of publication, Rothbort held no positions in Ruth's Chris Steak House.
Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded
, a registered investment advisor based in Millburn, N.J., which offers customized individually managed accounts to its clientele. In addition, LakeView Asset Management, LLC has developed and manages trading of long/short proprietary index strategies. Rothbort is a professor of finance at the Stillman School of Business at
. Prior to that, Rothbort worked at Merrill Lynch for 10 years. During his tenure at Merrill, he was instrumental in building the global equity derivative business, started and managed the global equity swap business and oversaw and coordinated the secured funding, collateral management and collateral identification for the global capital markets group and corporate treasury of Merrill Lynch.