Wall Street Watch Thursday: Goodbye Ruby Tuesday?

Ruby Tuesday

Casual dining still isn't leaving any room for dessert.

Ruby Tuesday (RT) posted uninspiring quarterly results after Wednesday's market close. Revenue rose a mere 1% to $332.9 million, as a 1.9% increase in same-store sales and the acquisition of two smaller chains barely offset the closure of 27 company-owned eateries over the past year.

This may not seem all that impressive, but keep in mind that this is the first time in nearly two years that Ruby Tuesday posts positive comps.

The path to Ruby Tuesday's bottom line is even less enchanting. Net income declined from $3.1 million to $2.6 million. Analysts were holding out for a slight increase in profitability. Even if you back out costs related to the company's CEO search -- a reasonable deduction since they are considered one-time expenses -- Ruby Tuesday's adjusted net income of $2.9 million still falls short of expectations.

The market didn't like the numbers, but don't say goodbye to Ruby Tuesday. Posting positive same-store sales for the first time in seven quarters is a good start. The company also pointed out that it's starting to wean customers off of coupons. As long as restaurant traffic holds up, this should have a positive impact on profitability.

Investors may also want to start getting excited about its Tex-Mex-based Lime Fresh quick-service eatery and Marlin & Ray's seafood chain. Both concepts have roughly a dozen locations, giving Ruby Tuesday the potential for growth at a time when its namesake concept seems a bit stagnant.

Other Things Worth Watching

When will the bleeding stop? The S&P 500 has closed lower for four consecutive trading days now. This isn't a time to panic. Each of the four straight losses has been small, and the widely tracked index of 500 blue chip companies is off by less 2% over the span of the losing streak. However, you can be sure that nervous investors will be watching which way the market closes on Thursday. Five consecutive down days is something that rarely happens even during bear markets.

Despite the general market's setback in recent days, it pays to be thrifty. Shares of Wal-Mart (WMT) and Costco (COST) hit all-time highs on Wednesday, and will hope to pad those highs on Thursday. Warehouse club operator Costco got there by posting better than expected results on Wednesday morning. Wal-Mart -- the world's largest retailer -- moved higher after offering encouraging prospects for holiday sales and introducing same-day deliveries for online orders in four test markets.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Costco Wholesale. Motley Fool newsletter services have recommended buying shares of Costco Wholesale.

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The only time I even go to Ruby Tuesday is if I have a coupon..prices are ridiculous otherwise..so eliminate their coupons and I wont be going back!!!

October 19 2012 at 9:00 AM Report abuse rate up rate down Reply
Jan Morgan CNN

Ruby Tuesday has a great recipe book....much better than the food you find in the store....

October 15 2012 at 5:23 PM Report abuse rate up rate down Reply
Trudy Marie

Ruby Tuesday has the WORST food at RIDICULOUSLY HIGH PRICES.....who cares!

October 11 2012 at 5:20 PM Report abuse rate up rate down Reply