Donald Smith (Trades, Portfolio) of Donald Smith & Co. increased his stake in Ruby Tuesday Inc. (RT, Financial) by 10.72% on Aug. 18.
Smith serves as president and chief investment officer at Donald Smith & Co. He is a deep-value manager and uses a bottom-up approach. His firm invests in out-of-favor companies selling at a discount to their tangible book value that have significant earnings potential within two to four years.
In Ruby Tuesday, Smith purchased 585,249 shares for an average price of $3.11 per share. The transaction had an impact of 0.05% on his portfolio. He now owns 6,046,821 shares.
Ruby Tuesday owns, operates and franchises a casual dining restaurant chain of the same name. The first Ruby Tuesday opened in 1972 in Knoxville, Tennessee. The company was incorporated in 1996 and is headquartered in Maryville, Tennessee.
The company has a market cap of $163.6 million with an enterprise value of $340.2 million. It has a forward price-earnings (P/E) ratio of 23.04, a price-book (P/B) ratio of 0.41 and a price-sales (P/S) ratio of 0.15. It has a price-free cash flow (PFCF) ratio of 18.13 and a price-operating cash flow (POCF) ratio of 3.6.
GuruFocus ranked the company’s financial strength 5 of 10. Its Piotroski F-Score of 4 indicates a stable financial condition. Its Altman Z-Score is 2.03, placing it in the grey zone. The company has a Beneish M-Score of -3.8, which implies the company does not manipulate its financial records. Ruby Tuesday’s cash-debt ratio of 0.3 is below the industry median of 0.6.
GuruFocus ranked the company’s profitability and growth 3 of 10. It has an operating margin of -6.7% and a net margin of -4.6%. Its return on equity (ROE) is -11.4%, ranking below 89% of other companies in the global restaurants industry. Its return on assets (ROA) is -5.7%, ranking below 88% of other companies. Its return on capital (ROC) is -10.03%, ranking below 88% of its competitors.
Ruby Tuesday’s largest shareholder among the gurus is Smith. He owns 10.05% of outstanding shares, which is 0.51% of his total assets managed. Chuck Royce (Trades, Portfolio), Jim Simons (Trades, Portfolio), Hotchkis & Wiley and Barrow, Hanley, Mewhinney & Strauss also hold stock in the company.
The DCF Calculator gives the stock a fair value of $-8.88; it was trading at $2.7 on Tuesday.
Disclosure: I do not own stock in any companies mentioned in the article.
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