Assessing Ruth’s Hospitality Group Inc’s (NASDAQ:RUTH) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Ruth’s Hospitality Group is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its hospitality industry peers.
How RUTH fared against its long-term earnings performance and its industry
RUTH’s trailing twelve-month earnings (from 01 July 2018) of US$35m has increased by 9.0% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.6%, indicating the rate at which RUTH is growing has accelerated. How has it been able to do this? Let’s see if it is only due to an industry uplift, or if Ruth’s Hospitality Group has seen some company-specific growth.
In terms of returns from investment, Ruth’s Hospitality Group has invested its equity funds well leading to a 39% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the US Hospitality industry of 8.1%, indicating Ruth’s Hospitality Group has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Ruth’s Hospitality Group’s debt level, has declined over the past 3 years from 33% to 31%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 41% to 57% over the past 5 years.
What does this mean?
Though Ruth’s Hospitality Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Ruth’s Hospitality Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Ruth’s Hospitality Group to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RUTH’s future growth? Take a look at our free research report of analyst consensus for RUTH’s outlook.
- Financial Health: Are RUTH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 01 July 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.