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Ruby Tuesday, Inc. Message Board

  • jsmithxx07 jsmithxx07 Nov 25, 2009 4:59 PM Flag

    Bearish Trend

    Looks like solid resistence at $7. Also looks like a head and shoulder top formation on the daily chart signaling a retreat to the high 5s / low 6s. A close below 6.40 in the upcoming days should confirm. Happy Thanksgiving. J

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    • tons of restaurants around to find jobs at, but i hear ya.

      they should have invested their paychecks into RT stock hehe

    • I was perhaps thinking more of the employees :-(

    • Hey Raven..I bought out my position at 7.20. I'm going to wait till after the call to short again. I want to see if the 4 year sales skid continues and guidance on what I expect(from my first post) to be an awful sales quarter.

    • Lol...This company has close to 1/4 of it's restaurants in malls/mall parking lots or shopping plazas. If you don't think SSS is going to be affected by dismal holiday sales you are crazy. You keep going back to the balance sheet on this one, which was appropriate when the stock was at $1 and debt covenants were a concern. That is over now and in the restaurant world same sales is king. I've been following restaurants for over a decade. This one in particular. I owned this stock in the low 30s and watched the disaster that was smart eating unfold. It's been one bad decision after another. I can promise you this, enjoy q2 numbers(which will suck less), because q3 is going to be a shocker. If you read my original post on this board months ago it was when I shorted at 8.30. Yes I'm still adding to that position in the high 6s. DRI and Cake are much better buys if you are trying to diversify by owning a restaurant stock. If you are looking to short, RT is your stock.

      • 2 Replies to jsmithxx07
      • Hope you didn't do something silly and hold your short. Like I said, you probably don't have a very unbiased read on this stock.

        Here we go marching back to the $8-$9 range.



      • So you think that a restaurant near a mall with high traffic (even if sales don't match) is a worse location than some standalone Chili's in the middle of nowhere?

        I'm curious...why do you think I'd take you seriously if you owned this stock at $30, lost your ass, and are now shorting this stock at $6.80? LOL. Dude, you are completely upside down. You should have been shorting at $30 and you SHOULD BE BUYING TODAY.

        Isn't there a chance that at $30 it might have been overvalued, and at $6 it might be UNDERVALUED?

        Christ, I started buying this in the $8 range in September 2008, and I thought I had it bad. Of course, it looked cheap then, and it looks cheap now.

        Your recommendation of CAKE, by the way, just tells me everything I need to know about your investing theories. I'm curious, if "1/4" of RT's stores are in malls, WHERE THE HELL DO YOU THINK ALL OF CAKE'S STORES ARE? I'd say close to 100% of CAKE's locations are in malls.

        Dude, can you say RT is in trouble because it is attached to malls and think CAKE is a buy? That just tells me you have absolutely no clue how to analyze the restaurant space.

        By the way...CAKE trades at 7.2x cash flow. RT trades at about 4x. CAKE trades at double the EPS multiple that RT trades at, and RT has depreciation that depresses EPS and makes the multiple look too high, CAKE does not because it doesn't own its locations.

        Honestly, Jsmith...congrats if you've made a few bucks shorting RT from $6.80 to $6.50, but I'm going to tell you something straight up...your investment thesis on RT, CAKE, and clearly restaurants in general is COMPLETELY WRONG.

        If you really think mall sales affect restaurant sales (I don't deny they do to a certain extent), then you should be short CAKE and long RT.

        But you clearly don't understand valuation or industry fundamentals.

        Wow...literally, now I know what I'm dealing with. I thought you folks were just plain wrong about RT, but I see it is far more systemic.

        Good luck, because you are absolutely going to need it. Your bets are just dead wrong.



    • Your right that today may be a last chance to get in at $6.00. I just shorted more at 6.80. Here we come 5s. Dismal holiday sales are going to beat this thing into the 4s. Online shopping does this company no good.

      • 1 Reply to jsmithxx07
      • Sounds like you have the wrong stock, Jsmith. RT is actually a restaurant chain. It's called Ruby Tuesdays. As it doesn't sell traditional holiday gifts, it won't technically get dragged down by soft sales. Besides, everyone expects this holiday season to be soft. I'm not smart enough to predict holiday sales.

        But here's why there isn't a chance it goes to $4. At $4, you are buying $1.60 of free cash per share. That means you are paying 2.5x free cash flow. the inverse makes this a 40% yield.

        LOL. Good luck with this short...pure madness shorting in the $6-$7 range here. Used to be far more shorts posting on this board, particularly when the stock was at $8-$9 range. They were right in the short-term, and have since left.

        You, my friend, are the last brave soul. I'm not much of a short, but in recent history, the month preceding earnings have been great times for the bulls. Factor in a Santa Claus rally, and I'm not sure how you think you have an edge here.

        Never mind that pesky improving economy.

        Enjoy your nickels...the longs will enjoy our Benjamins.



    • Wait for it.... I'll agree with Raven that shorting this isn't for the faint hearted. Trend however by technical indicators is still bearish. Today finishes flat and will be back in the low 6s by week end.

    • So much for that bearish trend.


      Here's the thing, you TA folks. You might be right, which Jsmith was for a few days, but you have to have perfect timing. I don't have that, I'll admit. I would bet most of you don't either, despite the fact that everyone makes money on message boards.

      The fact the volatility here if you dare. You might make some moeny here and there. But fact of the matter is that RT is generating $50-$70 million of NORMALIZED free cash flow (i.e., after on-going capex requirements to maintain stores each year...not the current low run rate given the store refresh). That's about a $1.10 at a trough cash flow run rate given this awful economy. What's a trough? Draw yourself a U on an x/y axis. We are at the bottom of the U. That's a trough, folks.

      At $7.00, you are buying yourself a roughly 15% trough free cash flow yield. None of you understand private market valuation, let alone public market valuation...but go ask someone you know who does valuation work, and ask them if they'd mortgage their home for a 15% normalized free cash flow yield.

      The answer would be yes.

      So if you can short and make money...good for you. I don't begrudge moneymakers...I just can't stand windbags with no stake in the stock. But you are playing an exceptionally risky game with your capital at this point.



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