So what happened? Well, Ruth's Chris' guidance calls for it to earn between $0.24 and $0.26 a share, while Wall Street is donning a bib at $0.26 a share. Yes, it's still in range, but a little "we will exceed" language would have been sorely appreciated. The company is expecting to report sales growth of 15% for the period on total revenues of at least $65.1 million. Analysts had been expecting sales to come in at just $61.7 million.
That last point is good, right? Not necessarily. With the top line handily coming in ahead of expectations and profits coming in a penny or two light, it means that net margins will be clocking in weaker than Wall Street had been projecting. And that's why the mixed greens were sent back to the kitchen by finicky model-munching analysts.
Pity, because Ruth's Chris looks pretty tasty in general. Comps at the 94-unit chain grew by 6.8% as a result of hungry patrons not flinching through a pair of minor price hikes over the past year. The showing is even more impressive in light of the fact that same unit sales had risen by 5.2% during the same quarter in 2005.
Upscale steakhouses have been pretty resilient over the past few years. It's why even the leading casual chains have high-end chophouses in their portfolio. Rare Hospitality (NASDAQ:RARE) has Capital Grille. Outback (NYSE:OSI) has Fleming's Prime. Lone Star Steakhouse (NASDAQ:STAR) has Sullivan's and Del Frisco's.
Ruth's Chris is a pure play in the high-ticket market, along with recent IPO Morton's Restaurant Group (NYSE:MRT). It's a niche that will only continue to improve as the economy inches ahead and corporate spending picks up.
There is more good than bad in Ruth's Chris' reiteration. Don't let the lower share price upset your appetite.
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 theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
