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Ruth's Hospitality Group After Mitchell's

Ruth's Hospitality Group, Inc (RUTH) has been on a roll, along with most restaurant stocks, 42% above its 52 week low, $10.39. Unlike most stocks in the industry, RUTH should not be considered a low crude oil/consumer play. The money saved by the consumer at the pump is not going to magically propel customers to dine out at RUTH with an average check of $73+/guest, although not high in the category. The health of the three categories of its guests remains strong, business, regulars and special occasion diners. RUTH closed its declining Mitchell's Restaurants, along with its Cameron's Steakhouses, for $10 million and released pro-forma statements illustrating the effect of the sale.

RUTH obviously looks better without Mitchell's dragging it down with a loss of $0.26 through Q3 FY 2014. Restaurant gross margins improve through three quarters of 2014 from 17.3% to 19.3% with the bulk of the improvement from… Read More …