Why Ruth's Hospitality Group Shares Jumped

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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 Ruth's Hospitality Group (NASDAQ: RUTH  ) were making investors feel at home today, gaining as much as 14% after topping estimates, and announcing a quarterly dividend in its report today.

So what:  The parent of Ruth's Chris Steakhouse, and other restaurants, said adjusted earnings per share came in at $0.25, besting estimates by $0.06, and up from $0.15 a year ago. Revenues, meanwhile, were up 7%, to $107.4 million, beating expectations by 1.5%. Same-store sales at Ruth's Chris, the company's core franchise, were up 6.6%, but more importantly, Ruth's said it would start paying a $0.04 quarterly dividend,  and authorize a $30 million share buyback program.

Now what: The new dividend payout gives Ruth's shareholders a modest yield of 1.4%, but investors will likely see future increases, especially if the restaurant chain continues to post more quarters like the one we just saw. For shareholders who got in last summer when the stock was trading around $6, the yield is a juicier 2.7%. The share buyback program also gives management the ability to reduce the outstanding share count by as much as 7.5% at today's closing price, thereby inflating the share value by the same amount. With strong same-store sales, a shareholder friendly cash strategy, and an improving macro environment likely to favor the high-end steakhouse chain, there's a lot to like here.

Don't miss out the next time Ruth's serves some important news. Add the company to your Watchlist  to stay connected.


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  • Report this Comment On May 04, 2013, at 7:13 AM, nprfreak wrote:

    As a long suffering RUTH holder, I say FINALLY!!! The stock would have suffered in the downturn in any case, but the timing on the Mitchell's aquisition (no one knew the then future) added to the woes. The stock has been gradually bottoming since the PIPE a few years ago. I just wish I had bought more while it was down and out.

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Ruth’s Hospitality… CAPS Rating: ***