RUTH - Ruth's Hospitality Group: Labor Gains Partially Offset By Inflationary Pressures
- Ruth's Hospitality Group is one of the worst-performing restaurant stocks this year, up just 7% vs. a 17% return for its benchmark.
- The underperformance could be partially attributed to the slower recovery than hoped for in three of its markets combined with significant inflation in beef and seafood.
- However, the majority of company-owned restaurants are enjoying positive comps vs. 2019 levels, and Ruth's valuation is improving, with the stock trading at ~14x FY2022 earnings estimates.
- Given Ruth's ability to mostly offset inflationary pressures combined with an improving valuation, I would view any pullbacks below $17.80 as low-risk buying opportunities.
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Ruth's Hospitality Group: Labor Gains Partially Offset By Inflationary Pressures