The rocky road that Ruth's Chris Steak House (NASDAQ:RUTH) has endured since going public over the summer continues to pay off. In its second quarter as a public company, the upscale steakhouse chain reversed a year-ago loss to earn $0.02 a share, or $0.11 a stub on a pro forma basis.
Sales rose 10% because of an 11% gain in comps at company-owned eateries and a 3% gain at the unit level of its franchised locations. The results practically mirrored the company's second-quarter results, when Ruth's Chris also earned $0.11 a share on an 11% top-line spike.
Sounds like smooth sailing? Perhaps. However, keep in mind that Ruth's Chris went public as a New Orleans company. Hurricane Katrina savaged the company's corporate office, forcing management to relocate to Orlando, Fla.
It's been 10 distracting weeks for Ruth's Chris, obviously. The chain started by Ruth Fertel 40 years ago has yet to reopen its two New Orleans locations, and one may not reopen at all. The company's consistency in the face of disrupted personal lives is amazing.
Central Florida has proved to be a worthy base for other successful operators like Darden (NYSE:DRI) and Outback Steakhouse (NYSE:OSI). However, neither of those companies came to the area as an accidental tourist.
Ruth's Chris expects sequential improvement for the current quarter, with earnings coming in between $0.17 and $0.19 per share. Its guidance for 2006 calls for earnings between $0.80 and $0.85 a share. The chophouse chain is looking to add 11 to 15 new units, with existing locations posting a 3% to 4% gain in comps.
Steakhouses can make for fickle investments. Outback has been a standout performer, but the rest of its peers haven't necessarily made the cut. Lone Star Steakhouse (NASDAQ:STAR) was a high-flier like Outback in the early 1990s, but it stumbled badly as the decade wore on. Lone Star has bounced back, with its stock tripling over the past five years, but the shares are still trading well below their 1996 highs. Smith & Wollensky (NASDAQ:SWRG) has been a profitless mess since going public.
That makes Ruth's Chris's consistent growth in the face of corporate displacement all the more impressive. The company's eateries draw in meat lovers, but the Ruth's Chris's meatiest offering may be its own shares.
Longtime Fool contributor Rick Munarriz has eaten at Ruth's Chris before, but he does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
