Ruth’s Hospitality Pops 6.1% As 4Q Profit Tops Estimates

Shares of Ruth’s Hospitality Group closed 6.1% higher on Friday after the fine dining restaurant operator reported 4Q earnings that topped the Street’s estimates.

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Ruth’s (RUTH) reported a 94.2% year-over-year decline in 4Q earnings of $0.03 per share compared to the Street’s expectations of break-even earnings.

Meanwhile, the company’s revenues of $77.4 million declined 42.7% year-over-year and fell short of consensus estimates of $77.8 million. Restaurant sales declined 43.2% year-over-year to $72.2 million, while franchise income reduced 28% to $3.6 million.

Comparable restaurant sales at company-owned restaurants declined 39.7% in 4Q due to a 34.7% decline in traffic and a 7.6% decrease in average check. Notably, sales trends improved in October, where comparable sales (comps) were down 26.1%. However, comps further declined 35.2% and 53.9% in November and December, respectively, due to tighter COVID-19 pandemic-related restrictions. (See Ruth’s Hospitality stock analysis on TipRanks)

Following the results, Stephens analyst James Rutherford raised the stock’s price target to $25 (10.5% upside potential) from $19 and maintained a Buy rating. In a note to investors, the analyst said that he sees “plenty of opportunity for estimates to go higher,” amid “investor appetite for reopening trades.”

Turning now to the rest of the Wall Street community, Ruth’s Hospitality has a Moderate Buy consensus rating based on 2 Buys and 1 Hold. The average analyst price target of $20 implies about 17% downside from current levels. Shares have gained about 30% over the past 12 months.