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Steakhouse Stocks Cut Both Ways

It's been feast or famine with the steakhouse chains this week. First it was Morton's (NYSE: MRT  ) shedding 17% of its value yesterday after posting a wide loss and warning of a soft holiday quarter.

Meanwhile, back at the ranch, along came Texas Roadhouse (Nasdaq: TXRH  ) to save the day. The casual chain posted solid growth in its latest quarter, sending its shares 8% higher in early after-hours trading.

If you came into this trading week hungry for direction on fickle eatery stocks, you won't get it from two companies heading in different directions.

Morton's performance doesn't look so bad on the top line. Revenues grew by 13% to $78.9 million. Its four Italian eateries continue to struggle, although its bread-and-butter, upscale steakhouse concept -- now at 76 units and counting -- posted a healthy 7.3% spike in quarterly comps.

The problem at Morton's is the bottom line, where the company posted a loss of $0.04 a share. It's the first quarterly loss at the company in nearly two years, although analysts were expecting it. The rub is in the current quarter. Morton's wants to post a profit of $0.46 a share to $0.48 a share during its seasonally strongest quarter. Wall Street was projecting a profit of $0.51 a share, but has now lowered expectations to $0.47.

There were no unpleasant surprises a few hours later when Texas Roadhouse reported. The 275-unit steakhouse chain grew its net income by 15% compared with last year to $0.14 a share, just ahead of the market's expectations.

You won't see many other steakhouse chains, casual or upscale, shed a little color on the industry. The parent companies behind Lone Star Steakhouse, Outback, Smith & Wollensky, and Longhorn have all cashed out to private equity firms. CBRL Group (Nasdaq: CBRL  ) sold off its Logan's Roadhouse chain to concentrate on its flagship Cracker Barrel restaurants.

So what's left? Ruth's Chris (Nasdaq: RUTH  ) reports next week. Investors aren't holding out for much; earlier this month the company warned that comps for the quarter will clock in flat.

That sums up the state of the publicly traded steakhouse chains. If you want to push the envelope, you can see what a carnivore concept like Famous Dave's (Nasdaq: DAVE  ) is up to -- or perhaps some of the gourmet burger havens like Steak n Shake (NYSE: SNS  ) or Red Robin (Nasdaq: RRGB  ) -- but who are we kidding?

Private investors have picked the steakhouses bone dry. You're down to three flavors right now, and it would not be a shock if we're down to just two the next time that private equity gets hungry.

Beef up your knowledge on steakhouses:

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