Ruby Tuesday shares are within sniffing distance of their 52-week low, but not all market watchers are worried.
Writing for TheStreet.com, Jonathan Heller, president of KEJ Financial Advisors, says the Maryville-based restaurant chain deserves watching despite its recent bad earnings report.
Among other positives, Heller notes that RT owns considerable real estate.
“This is no small chain, with about 825 locations, 740 of which are company operated. But the kicker here is that the company owns the land and building for 368 locations and building only for another 250. That’s a potentially interesting portfolio of commercial real estate, especially considering the company’s current $730 million enterprise value. At current levels, shares also trade at just 0.76x tangible book value.”
Here’s Heller’s full report: Hello Ruby Tuesday
Restaurant chain Ruby Tuesday has tried several new ideas to recover from
the Great Recession but the company might be better off getting into the real estate business, a Bloomberg report suggests.
A story on Bloomberg.com says restaurant companies such as Maryville-based Ruby Tuesday and Lebanon, Tenn.-based Cracker Barrel Old Country Store “can make more money selling their own real estate than food.”
“The 10 biggest U.S. restaurants that sell for less than the value of their property, plants and equipment trade at 70 cents on the dollar,” Bloomberg says. The report notes that Ruby Tuesday owns $1 billion worth of fixed assets, “twice its market value.”
Activists investors are taking a hard look at both companies.
Maryville-based Ruby Tuesday Inc. is among 14 restaurant stocks on The Street.com’s risky list published today.
“Ruby Tuesday’s Z-Score has held steady at 2.57 for several years now, indicating the casual restaurant chain remains on stable-yet-shaky ground, unable to move the needle higher,” Street says.