These are trying times for all things Texas. Hurricane Emily is making a beeline for the state. Roger Clemens may be on the trading block. All-Star Kenny Rogers has some control issues off the mound. And Lone Star Steakhouse
Yes, I know. Lone Star is actually based in Kansas, but that's just more salt in the open wound. Lone Star's preliminary results indicate that the company earned $0.24 a share during its June quarter on flat overall sales growth. Wall Street was hoping for a $0.33 showing.
The blame here falls mostly on the company's flagship casual-dining chain. The restaurateur's three smaller concepts are all working on positive comps this year while Lone Star Steakhouse itself is in the red. That may be the way some patrons like their steaks, but it's no way to serve up an income statement.
The rest of the blame would fall on the company's corporate overhead. While it was able to improve on its operating margins at the restaurant level, its general and administrative costs rose far more ambitiously than the company's stagnant top line.
Some may remember Lone Star as one of the ultimate casual-dining growth stocks. Along with Outback Steakhouse
Lone Star went on to stumble. More than once. It finally did the honorable thing with its bountiful cash hoard and initiated a generous dividend policy. These days, shareholders are rewarded with $0.195-per-share payouts every three months. That translates into a healthy 2.7% yield and at least partly pacifies investors who now own part of a company far removed from its heady growth glory days.
Hold your head up, Texas. Maybe Emily will stay out. Maybe Roger will stay put. Maybe Kenny will stay docile. And maybe -- just maybe -- folks will flock to Lone Star Steakhouse again.
Bite into these related stories:
- RARE's LongHorn performance has been well done lately.
- Lone Star was looking better back in March.
- It wasn't looking too shabby last year, either.
Longtime Fool contributor Rick Munarriz wonders whether the roadhouse decor of scattered peanut shells would look good on top a fine linen tablecloth. He does own shares in CBRL Group. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
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