Ruby Tuesday: Lost momentum or good investment?

Ruby Tuesday’s steep earnings drop last week has attracted interesting contrasts in online chatter.

Ruby Tuesday

Ruby Tuesday

A report posted today on MSN Money suggests that the Maryville-based restaurant chain has “outgrown its momentum phase” and questions if it will continue to grow.

In contrast, The Street takes a more optimistic view of the company’s financials and has upgraded Ruby Tuesday’s stock from hold to buy.

Who’s right? Here’s more:


From the MSN Money report: “Ruby Tuesday has only $8 million in cash and almost $300 million in debt. The reason it’s still afloat is that it generated high eight figures in free cash flow. So it isn’t going bankrupt, and seems to be growing at about 13% annually and is priced appropriately. Bottom line: The concept has outgrown its momentum phase. The question going forward is whether it will be able to continue to grow.”

From The Street: “The company’s strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.”

Ruby Tuesday reported last week that its fiscal third-quarter earnings plunged to $4.5 million, or 7 cents per share, down almost 72 percent from the same period a year ago when the company earned $16 million, or 25 cents per share.


MSN Money: Will Chipotle follow Roby Tuesday’s crash?

The Street: Ruby Tuesday Inc. stock upgraded