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Ruby Tuesday, Inc. Message Board

  • giveorreceiveredbutt giveorreceiveredbutt Jan 16, 2008 4:22 PM Flag

    Bankruptcy a possibility

    The consumer has stopped spending and RT has a monster debt load. This is a recipe for disaster and looks like another Boston Market.

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    • is that why insiders bought a boat load you dope

    • Agreed, seems to me management doesn't see the consequences of the looming recession, consumers cutting back, companies heavy debt load and their progessively declining earnings.

      Eco101 says to tighten your belt and weather the upcoming storm, yet management is doing the opposite.

      Recipe for bankruptcy. Yeah management!

    • Before the rate cuts the company was expected to make money, now figure they can refinance the debt lower, that's a big boost to earnings, not to mention with people having more money from the gov't stimulus plan and less they pay on their home mortgages this company should perform nicely. In terms of the airport locations, they are franchised, meaning they rake in fees off them and the franchisee foots the cost. Management has also been buying up a lot of stock. It is also a good acquisition candidate by EAT or DRI.

    • They just don't stop.. Here they are again, planning restaurants at airports, like they've got money to burn.

    • A 10 yr low is a very nice price for a value investor if he considers the company to be a solid one. RT did accumulate a lot of debt as they were trying to leverage their impressive sales growth over the past 10+ years but they were taken by surprise by the recession fears in 2007 and should have stopped investing in new restaurants sooner (as has been said in the earnings call). Still, this offers a nice opportunity for investors as the panic on the market right now is overblown and many speculators don't take the time to look at the company in depth. The management admits it was a mistake to not limit their investments sooner but at the same time, their operations and their image from a consumer's perspective are stronger than in the past and by reducing growth expenditures in the next 2-3 years, we should see a large improvements in the numbers.

    • At this price, yes, much has been priced in, that's why I have a hold recommendation, but this looks to me like over a 10 year low. Does that build faith in the stock?
      How many of the competitors have over a 50% debt load?
      If this company is so efficient, why was that allowed to happen?.. it didn't happen overnite. Is that really a good business practice?

    • Don't you think that those aspects are priced in already? Fixed expenditures will be the same as FY 2007 and even if the FCF next year was only $80M next year (vs a possible $165 if we take this year's cash flow from operations), this would bring the P/FCF ratio to a mere 4.25. That's a lot lower than the competitors. As for competition, there's always been a lot in this industry. Looking at the valuation here, RT remains way cheaper than the rest.

    • I'd expect a partial selloff first, but I agree.
      Remodeling fees.. lol..

    • The debt only increased because of the remodeling initiative. Take a look at the last earnings call transcript, management said they will stop growth expenses next year. CapEx will decrease from $125M to $25M and the company will be able to bring in a lot of free cash flow to repay their debt.

 
RT
3.96-0.01(-0.25%)May 26 4:02 PMEDT