Critical Analysis: Ruby Tuesday (RT) versus The Habit Restaurants (HABT)
Ruby Tuesday (NYSE: RT) and The Habit Restaurants (NASDAQ:HABT) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.
Risk and Volatility
Ruby Tuesday has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500. Comparatively, The Habit Restaurants has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.
This is a breakdown of current ratings for Ruby Tuesday and The Habit Restaurants, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|The Habit Restaurants||0||3||3||0||2.50|
The Habit Restaurants has a consensus target price of $17.92, indicating a potential upside of 34.21%. Given The Habit Restaurants’ higher probable upside, analysts clearly believe The Habit Restaurants is more favorable than Ruby Tuesday.
Valuation and Earnings
This table compares Ruby Tuesday and The Habit Restaurants’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Ruby Tuesday||$951.97 million||0.13||$29.49 million||($1.76)||-1.19|
|The Habit Restaurants||$307.71 million||0.88||$29.44 million||$0.25||53.40|
Ruby Tuesday has higher revenue and earnings than The Habit Restaurants. Ruby Tuesday is trading at a lower price-to-earnings ratio than The Habit Restaurants, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
76.1% of Ruby Tuesday shares are held by institutional investors. Comparatively, 73.8% of The Habit Restaurants shares are held by institutional investors. 4.8% of Ruby Tuesday shares are held by insiders. Comparatively, 16.1% of The Habit Restaurants shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This table compares Ruby Tuesday and The Habit Restaurants’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|The Habit Restaurants||1.64%||4.97%||2.16%|
The Habit Restaurants beats Ruby Tuesday on 9 of the 12 factors compared between the two stocks.
Ruby Tuesday Company Profile
Ruby Tuesday, Inc. owns and operates Ruby Tuesday casual dining and Lime Fresh Mexican Grill (Lime Fresh) casual restaurants. The Company also franchises the Ruby Tuesday concept in selected domestic and international markets, and the Lime Fresh concept in selected domestic markets. Its segments include Ruby Tuesday concept and Lime Fresh concept. As of March 1, 2016, the Company operated 729 Ruby Tuesday restaurants in 44 states, 13 foreign countries, and Guam, and there were 16 Lime Fresh restaurants in two states. Of those restaurants, it owned and operated approximately 649 Ruby Tuesday restaurants and franchised over 80 Ruby Tuesday restaurants, which consisted of 28 domestic and 52 international restaurants. It also owned and operated over eight Lime Fresh restaurants and franchised eight Lime Fresh domestic restaurants. The Company’s corporate-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic and Midwest of the United States.
The Habit Restaurants Company Profile
The Habit Restaurants, Inc. (Habit Burger Grill) is a fast casual restaurant company. The Company is engaged in preparing made-to-order char-grilled burgers and sandwiches featuring tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. In addition, it offers sides, shakes and malts. The Company prepares its burgers with char-grilled preparation, topped with caramelized onions, melted cheese, lettuce and tomatoes. It operates a range of restaurant formats, including end-cap, free-standing, inline, end-cap drive-thru and traditional stand-alone drive-in, primarily within suburban shopping centers and retail settings. As of December 27, 2016, the Company had 172 locations in 15 markets in 10 states and the United Arab Emirates, including franchised/licensed locations (excluding six licensed locations in Santa Barbara County, California).
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