Why Ruby Tuesday Shares Went Stale
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of casual dining restaurant chain Ruby Tuesday fell 10% on Thursday, and has investors longing for it to be Friday already. The impetus for the drop: Ruby Tuesday's second-quarter earnings results.
So what: As highlighted by my Foolish colleague Eric Volkman, Ruby Tuesday reported a 1% drop in revenue to $304 million, as same-store sales trudged higher by just 0.3%. For the quarter, Ruby Tuesday lost $15 million, or $0.07 per share, versus a $2 million profit in the year-ago period. Wall Street, on the other hand, had expected a smaller loss of $0.06, and had projected same-store sales would rise by a more robust 1%.
Now what: Ruby Tuesday's turnaround continues, and the reasons to avoid the stock continue to widen. Ruby Tuesday has been working to close underperforming restaurants, but is struggling to match the promotional activity of peers like Buffalo Wild Wings , which has a strong cash position that enables them to drive expansion without going into debt, and is driving a significant amount of customer traffic with its menu and ambience. Unless food costs plummet, or consumers magically get more discretionary money to spend on eating out, Ruby Tuesday remains a company I want to stay far away from.
Craving more input? Start by adding Ruby Tuesday to your free and personalized Watchlist, so you can keep up on the latest news with the company.
What's inside Supernova?
If you're an investor looking for big long-term winners, Motley Fool co-founder David Gardner's picks have frequently trounced the market. How? Because he's always on the lookout for revolutionary stocks, and recommends them before Wall Street catches on to their disruptive potential. If you're interested in how David discovers his winners, click here to get instant access to a personal tour behind David's Supernova service.
The article Why Ruby Tuesday Shares Went Stale originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Motley Fool newsletter services have recommended buying shares of, and writing covered calls on, Buffalo Wild Wings. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.