Second up day for all the U.S. Markets and the second down day for RT.
I don't know what's going on but I do not like the reaction of this stock.
I will continue to monitor it though.
Hi Jina. Thanks for your reply. I have two questions? First, what profits are you talking about? Why do you assume I am disgruntled (perhaps a definition of the term would be a good starting point)?
You are an Idiot!! Stocks are up and I have watched as my restaurant's profits are way up as well. This is a great company and it has a great future! Just because you are disgruntled it does not mean that the rest of us have to be!!
LOL...ok, no need to post anymore, Jamie. You are completely worthless, you offer no insight other than fannies in restaurants are down. Well no shit, sherlock. You clearly have no market savvy, and just read the Yahoo Tech Ticker with Hank Blodgett and Aaron Task.
You, my friend, are clearly too stupid to be investing on your own.
Praise be the deity, we have a breakthrough! Raven humbly admitted, "I can't help myself". The first step to recovery is to realize you have a profound problem. As you are aware, I have been trying to point out that your elevator didn’t appear to be rising to the top floor, so to speak, for weeks now. No need to thank me, I feel it is the duty of all to help a soul so clearly in distress. Now that you have reconciled yourself to the fact that you “can’t help” yourself from blabbering utter insanity, find professional help without delay. A combination of medication and therapy adhered to strictly for years might produce some positive results. Look on the bright side, instead of your current delusions that you are a new age financial wonder girl and world class real estate agent; you could believe you were the Easter Bunny for example (ummmm, you don’t think you’re the EB, right?). As we all know, in your case, any of those scenarios are equally implausible.
I will grant you this; it was ignorant of me to bring up all those silly old school metrics. What do they show? That RT historically earns little or no profit, has large amounts of debt, is volatile, risky and has fewer customers than its competition (well, I didn’t bring that up, but it is true). None of that old fashion profit garbage matters and it shows ignorance to talk about that. Earning profits and paying dividends went the way of the buggy whip. Besides, how can they earn a profit when they are shelling out all that cash on depreciation expense? They own lots of real estate and their EV/mouse index normalized on full moon at high tide shows that RT is worth at least mid 20’s. Too bad those idiots over at Applebee’s didn’t consult you on the sale of their real estate. You could have sold it for them at its normalized value and gotten at least 6.5 million a pop. But then again, they panicked because they didn’t have your knowledge of the commercial real estate market.
I can't help myself. You realize, Jamie, that by including literally 6 metrics out of 8 that are completely meaningless to a stock like RT, you betray your ignorance on this name, right?
Here's one for you to consider that's not on Yahoo finance. Any idea how much a Ruby Tuesday's style real estate outlot goes for these days? Well, Applebees sold most of its real estate for about $1 million a plot. Of course, they panicked and got awful pricing. The pricing is more like $1.5 million per outlot. Now, I want you do do some simple math. Multiply $1.5 million times the number of restaurants that RT owns. It's about 700. OK? Then, what I want you to do is subtract net debt (net of cash) and all other net liabilities (net of assets other than goodwill, intangibles, and net PP&E). OK? Next, divide that by the shares outstanding...about 65 million shares currently, I believe.
Tell me what that number is. Then compare it to the stock price, OK? Guess what that should tell you...
At $7, RT's trades for the value of its real estate, and you get the restaurant business for free.
What you've just calculated is a current market liquidation value for this company. Congrats...it's a tad better than book value per share, Mr. Valueline reader.
Now...I'm officially done with you. None of you has any real read on this company, and most are just playing it for trades. Present to me an argument instead of regurgitating what you read in the media, and I'll give you the time of day.
P/E is cheap...currently just over 10.4x for next year's earnings. Market is at about 14x. I don't think RT deserves less than a market multiple, as it won't grow any faster or slower than the market at this point.
Of course, P/E is relatively meaningless here (I'm sure you know that, Jamie), given high levels of depreciation from real estate on the balance sheet. As such, the far more relevant number is cash flow per share. Currently, the estimate is about $1.60, after capex. That puts RT's BETTER multiple at 4.4x, like I noted yesterday.
LT Debt to equity is high, but it's also a trailing number. Additionally, they are paying down $50-$100 milllion a year, so I don't really care about that.
Quick ratio is quite good...high levels of cash currently, but I'm not sure I care much about this anyhow, because RT isn't going out of business anytime soon.
No dividends, but it used to pay a $0.70 dividend annually. Had to stop paying it due to LOC constraints and banker covenants. I'd offer that in the next 1-2 years, they'll reinstate a dividend as they pay down the LOC. YOu do know what LOC stands for, right?
Net profit margin...not very relevant given depreciation expense, so it will be lower than competitors. More relevant...cash flow margin...and it's higher than most of its competitors.
ROA is going to be lower given heavy real estate holdings on balance sheet. I don't really care about this number, as a result. I care far more about ROE here.
Net income, 1Y, 5Y...who cares. Go find it on Yahoo.
Beta...that's the beauty of this sucker. Adjusted beta is high due to higher leverage...Bloomberg has it at 1.74 adjusted and over 2 gross. That's exactly what I want. Number is skewed a bit by the last few months of ridiculous swings.
No offense, but you can take your Value Line and do all your own archaic financial analysis. I don't bother with stuff that isn't relevant to a stock...and most of your points here aren't relevant due to heavy non-cash depreciation and real estate on the books.
Of course, don't let that stop you from having a bear thesis on the stock. I've profited mightily off you moronic bears looking in your rear-view mirror trying to invest. I'd say all your concerns were quite relevant 18-24 months ago...but you rarely make money in hindsight.
I've devoted far more time than I need to with you. You do what you want to do...and I'd advise you to follow the cash flow here, and forget nearly every other ratio/multiple as irrelevant. RT is still my single biggest position.
By the way bears, I know this won't help your thesis, but the restaurant expansion index is creeping up to 100...registered about 98 this past month. Over 100, and restaurants are actually expanding locations again. I know...most of you think that 1/3rd of all restaurants are going under. LOL. You continue to think that, and I'll continue to mint money on your selling.
My Mouse index is as valid as your Monty Python analysis methods. Since you analyze stocks for a living (the Pittsburgh Pirates are professional baseball players too), would you please educate all of us. What do the following ratios measue? What do analysts consider to be average or good values for these ratios? What are RT values? Finally, please explain why RT scores so poorly in these catagories and why investors should ignore the risk and financial weakness they indicate?
LT Debt / Equity
Div / Share
Net Profit Margin
Net Income 1y and 5y
You ignore these numbers because you are a cheerleader for RT and they tell a much different story than you want to tell. These metrics are far better indicators of risk and finacial strength than ev/mouse. They send up a red flag. True, they are not the only metrics to consider. I wouldn't waste my time placing a value on RT. Its too risky. When it comes to risk, RT is like playing chicken with a freight train. We agree that we see light at the end of the RT tunnel. The difference between you and I is that I have the wisdom and experience to recognize that I don't know everything (like whether or not the light is from a train or the sun). You are cocksure and ignore the evidence that this is a tunnel that trains often run through (that indicates lack of experience).
I wouldn't say that nobody should invest in RT. But they should understand that they are investing in a risky, volitile company with a mixed balance sheet and weak fundamentals. Sometimes risk pays off.
Let's talk about your points. As "notadummy," though he may be, notes, I've been spewing my blather since April [sic, March], after my last buy at $0.91. Granted this "stagnant" stock is at $7+, on its way to the mid-teens at least, but what do I know. I just blather.
Here's the deal. All my "technical and archaic" forms of valuing a stock...right, like cash flow multiples and EV/EBITDA to compare one stock with debt (RT) to one stock without debt (KONA) operating very much in the same industry. I understand how those pesky numbers get in the way of investment fun, or blithe ignorance, so we shun what we fear.
Fact of the matter is very simple. While RT isn't putting "butts" into seats like it once was, the SALIENT question is very simple: Is the stock properly discounting the new reality? The butts they are putting into seats are generating $70-$100 million of FREE cash flow (after "Debt Service," after current capex though not run-rate capex), and they are paying down their already low debt balance vis-a-vis gross assets. In order to make the case that the stock is OVERVALUED, you have to tell me that current cash flow fundamentals are going to get WORSE. After 1.5 years of the worst recession in 70 years, I'm curious how you can possibly make that statement with a straight face. How can things possibly be worse than the last 1.5 years? Unemployment MAY tick up over 10%, MAYBE. That's another 800K workers from a 125 million strong workforce. If those 800K folks get laid off, exactly what will the affect be on RT's or any restaurant's cash flow? I'll tell you what...MINIMAL if at all, given that the economy is CLEARLY stabilizing.
So, what do you pay for $70-$100 million of annual TROUGH-level FREE cash flow? Well, right now, the market is paying a 4.4x multiple on current and next year's estimates. Let's flip that around. If you owned RT private at this price, you'd be taking home a nearly 25% FREE CASH FLOW yield. You let me know where else you can find that yield. If RT doubled from here...you'd own a 12% yield. Folks, THAT'S AFTER THEY PAY DEBT SERVICE (i.e., interest).
As for tempering my words because I'm "so damn sure of everything?" I do this for a living. I look at stocks and fixed income instruments all day. I make judgments on yields. I make judgments on earnings. I bought RT a year ago this month because it looked STUPID cheap even going into what I knew would be an economic downswing. Did I know it would be a quick depression? NO. But this economy has been in recession since 4Q07.
Here's what I know for certain. This stock was IMPROPERLY left for dead by March 7th. To beat a stock down to below a dollar, you have to have something like 90%+ consensus that this business is worth NOTHING. Well, 90% of the folks that sold this into oblivion were WRONG. I bought when folks sold. I was right. I don't think I'm wrong here STILL because I still read NOTHING but pessimism on this name, and frankly, I'm reading yesterday's news. KONA just rejected a takeover offer that would have valued RT at $13 (after the stock issuance). KONA, not exactly a household, well capitalized name, said no, and I don't blame them. If KONA thinks that undervalues their company, what does that say about the household, well capitalized names in this space?
Jamison, why don't you stop reporting yesterday's news, and start telling me if this stock is under or overvalued relative to its current and potential operating fundamentals in place, right now. If you still think this is overvalued, you had better show me a comp in the space that would explain that clearly. Because this is STOCK investing, and the NUMBERS ARE THE GRAIL.
It's a damn shame that there are good people out of work while people who are out of thier element get fat and rich.
Award of Fiscal Year 2009 Annual Cash Incentive
Executive Officer Award
Samuel E. Beall, III $856,136
Marguerite N. Duffy $165,716
Kimberly S. Grant $239,014
Nicolas N. Ibrahim $165,716
Robert LeBoeuf $129,466
I appologized for the sarcasm, not for the criticism. What you said is right on the money about the market being dried up. The coming economic recovery probably won't help much, since it is not likely to be a US labor friendly recovery, as short sighted corporations continue to export good paying jobs to take advantage of slaves overseas. The underlying problem we face in this country is overcapacity due to increased productivity and shrinking disposable income. We are unable to consume the goods and services we produce and import. We used our home equity to consume in the 90's and the whole mess crashed last year. The result is a smaller and smaller pool of people who can afford to pay to eat out.
Why apologize? Raven has been spouting the same drabble since April continuing his fantastic claims about RT hitting double digits by mid summer using some ridiculous metrics that he's concocted in his mother's basement.
RT is a stagnant turd of a company, as your said, their free cash flow is currently being used to pay interest on debt, and their profitability only comes from closing restaurants and firing low level operations staff.
RT has suffered irreparable damage from their failed endeavor to move up to the upscale casual sector, while effectively pricing out their key demographic sector. And yet, the people who made these bad decisions still keep their jobs.
Gamble all you want on this stock, but it is going nowhere. This is a dried up concept in a dried up market.