Ruby Tuesday Earnings Preview

Investors never know what to expect for Ruby Tuesday (NYSE: RT  ) , as it has wavered between topping and missing analysts estimates during the past fiscal year. The company will unveil its latest earnings on Thursday. Ruby Tuesday owns and operates the Ruby Tuesday restaurant chain.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Ruby Tuesday with five of eight analysts rating it hold. Analysts don't like Ruby Tuesday as much as competitor Red Robin Gourmet Burgers overall. Five out of 10 analysts rate Red Robin Gourmet Burgers a buy compared to two of eight for Ruby Tuesday. Ruby Tuesday's rating hasn't changed over the past three months.
  • Revenue forecasts: On average, analysts predict $313.3 million in revenue this quarter. That would represent a rise of 7.9% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is a loss of $0.06 per share. Estimates range from a loss of $0.08 to a loss of $0.04.

What our community says:
CAPS All-Stars are split on Ruby Tuesday, with 48.1% rating it an outperform and 51.9% giving it an underperform rating. The community is split on the stock with 51.6% Fools granting it an outperform rating and 48.4% an underperform rating. Fools are bearish on Ruby Tuesday and haven't been shy with their opinions lately, logging 187 posts in the past 30 days. Ruby Tuesday's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:
Ruby Tuesday's profit has risen year over year by an average of more than threefold over the past five quarters. Revenue has now gone up for three straight quarters. The company's gross margin shrank by 3.6 percentage points in the last quarter. Revenue rose 9.1% while cost of sales rose 14% to $279.2 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

15.5%

18.0%

17.0%

15.5%

Operating Margin

2.3%

5.6%

6.1%

2.7%

Net Margin

0.9%

3.9%

5.0%

1.6%

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Earnings estimates provided by Zacks

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