1-Star Stocks Poised to Plunge: Ruby Tuesday?

Based on the aggregated intelligence of 130,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, restaurant operator Ruby Tuesday (NYSE: RT  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Ruby Tuesday's business, and see what CAPS investors are saying about the stock right now.

Ruby Tuesday facts

Headquarters (founded)

Maryville, Tenn. (1920)

Market Cap

$335 million

Industry

Restaurants

TTM Revenue

$1.27 billion

Management

Chairman/CEO Samuel Beall III
CFO Marguerite Duffy

1-Month Price Change

298%

Competitors

Brinker International (NYSE: EAT  )
Darden Restaurants (NYSE: DRI  )

CAPS members bearish on RT also bearish on

Pulte Homes (NYSE: PHM  )
MBIA (NYSE: MBI  )

CAPS members bullish on RT also bullish on

Citigroup (NYSE: C  )
Bank of America (NYSE: BAC  )

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 121 of the 219 members who have rated Ruby Tuesday -- or 55.2% -- believe the stock will underperform the S&P 500 going forward. These bears include kdakota630, who is ranked in the top 0.1% of our community, and TSIF.

Last Wednesday, kdakota630 brought attention to the stock's seemingly unwarranted price action:

Shorting the 60% pop today. Despite a good earnings report, let's not lose sight of the fact that it IS a restaurant in the midst of an economic downturn. People still need to eat, but they don't need to go to restaurants to do it when money is tight and unemployment rates keep rising.

In a pitch from two days later, TSIF elaborated on that bearish sentiment:

Ruby Tuesday posted a slightly better outlook than expected this week. Mr. Market is "hungry" for any good news. ... Ruby Tuesday's earnings were not anything to write home to momma about. Earnings were down almost 60%, same store sales were down 6.8% (although other eateries had 9-10% declines), rather than expanding 43 locations were closed (closing costs?). While better than expected Ruby Tuesday still forecasts a loss in 2009 of $0.45 to $0.55 per share. Cash flow and cash on hand is dismal.

What do you think about Ruby Tuesday, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 130,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (2) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 13, 2009, at 1:42 PM, mjonesy1985 wrote:

    I bought at $3.00 and sold at $6.66.... I cant complain and I think the stock will continue to outperform.

  • Report this Comment On May 08, 2009, at 5:42 PM, Mary953 wrote:

    Still holding this dreaded one-star stock which I bought below $3 and, after a difficult couple of days it is back down a bit to $7.95. Of course, I live close enough to the headquarters of the chain to have a front row seat on the changes that have been made to adjust to our economic times. It is a shame that I didn't put this on CAPS when I first realized that they would not only survive, but thrive. I would have all of the shields up to and including the 500 shield by now.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 873339, ~/Articles/ArticleHandler.aspx, 10/24/2014 9:54:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement