Ruby Tuesday (RT) is scheduled to release earnings after the close but investors are already betting on the outcome.
REUTERS Shares of Ruby Tuesday have gained 4.8% to $7.59 this morning, making it the third-best performer in the S&P 1500 and outpacing other restaurant stocks. Jack in the Box (JACK) has dropped 0.8% to $38.76, DineEquity (DIN), which operates Applebee’s and IHOP, has gained 0.1%% to 66.12, Denny’s (DENN) has fallen 0.2% to $6.06 and recent-IPO Potbelly (PBPB) has gained 1.7% to $30.73.
The stock might be getting a boost from B. Riley & Co., which started Ruby Tuesday with a Buy rating this morning. Its analysts write:
We initiate coverage of Ruby Tuesday, Inc. (RT) with a Buy rating primarily reflecting our belief that persistent erosion of sales has troughed, thus, positioning the company to recover when both the economy improves and the new menu/media platforms take hold. We have concerns about relevancy of the brand given persistent same-store sales (SSS) declines. However, we believe RT's consumer has had significant changes thrown at them over the last decade creating, in our opinion, confusion on how to use the brand (and to some degree alienation). This confusion has led to greater sales volatility versus peers during periods of compressed cycles of consumer spending as discretion heightens – we believe consistency and certainty with the guest experience wins in challenged times – and we expect the relatively new management team to deliver a consistent guest experience.
Shares of Ruby Tuesday have dropped 3.4% so far this year, even after today’s bounce.
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