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Ruby Tuesday, Inc. Message Board

  • slaughteredpig08 slaughteredpig08 Oct 6, 2009 1:56 AM Flag

    If RT disappoints on Wednesday, look out below

    Careful if you are going to hold this past Wednesday. RT could easily fall back to 6.50 if they miss across the board, especially when you consider the fact that it was trading in that range as recently as August. The closer this stock gets to 9 before earnings, the harder it may fall on a disappointment. I'd advise selling this between 8.50 - 9.00 )(if you get a chance) before earnings come out on Wednesday...because a miss will really cause some devastation here.

    (Disclosure: I have no position in RT as of right now, but the closer it gets to 9, the more I'm considering shorting it.)

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    • market up 170 points and RT down??? I think ill stay away from this stock today.

    • What happens if they beat?

    • May want to consider protecting a long position in RT from a miss by buying some puts

      • 1 Reply to slaughteredpig08
      • I actually don't disagree with this take...it's a smart trader move. Of course, in it for the long-term at this attractive cash flow multiple, it won't matter, but if you are trading, I think it's actually wise counsel.

        The question is...what constitutes a miss? EPS is meaningless here given the high depreciation. That, and off such a low base anyhow (I think the estimate for EPS is $0.09 per share for 1Q10), a few pennies here or there is big on a percentage basis, but can clearly just be variance as well. That, and as an AWFUL Motley Fool article notes, RT is "projected to grow from $0.01 to $0.09 year-over-year," it's pretty clear that if you are focusing on EPS, you might be focusing on a meaningless metric at this stage of the RECOVERY. 800% EPS growth...does that mean ANYTHING to anyone?

        I think disappointment might only come from SS revenue growth. I'm assuming the worst, which is basically that SS growth (decline) will basically approximate last quarter's number. In theory, it should be better, but I'm not going to hold my breath. That said, if GDP is up in calendar 3Q, then RT's 1Q10 should be marginally better than its 4Q09.

        I'm not much of a trader. I consider myself an investor. As such, quarterly variance doesn't interest me much, unless the variance points to a fundamental change in the business operations. As the underlying performance of the business still seems to properly mirror the awful macroeconomic environment, I'm still not overly concerned. But frankly, I'm not sure how operations and cash flow (both trailing and outlook) haven't improved at least due to the equity issuance. So I'm still firmly in the bullish camp here.

        Regards,

        Raven

 
RT
6.34-0.09(-1.40%)Dec 22 4:07 PMEST

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