During Oct. 11 and Oct. 12, nine directors and officers of Ruby Tuesday Inc. (RT, Financial) invested 256,740 new shares in the company. The insider buys cost $696,890 in the aggregate and increased the company’s stock price by 10% within the past 24 hours.
As mentioned in his Form 4 filing with the Securities and Exchange Commission, Donald E Hess purchased 120,300 shares of Ruby Tuesday, the largest investment among the directors. The following table summarizes the individual insider buys.
| Ruby Tuesday Insider Buys During Oct. 11 to Oct. 12, 2016 | |||||
| Insider | Position | Buy date | # of Shares | Share Price ($) | Total cost ($1000) |
| Jeffrey J. O'Neill | Director | 2016-10-12 | 7,140 | 2.81 | 20.06 |
| Stephen Sadove | Director | 2016-10-12 | 22,800 | 2.77 | 63.16 |
| F. Lane Cardwell Jr. | Interim CEO | 2016-10-11 | 50,000 | 2.75 | 137.50 |
| Kevin T. Clayton | Director | 2016-10-11 | 24,000 | 2.64 | 63.36 |
| Rhonda J. Parish | Chief legal officer | 2016-10-11 | 10,000 | 2.79 | 27.90 |
| Donald E. Hess | Director | 2016-10-11 | 120,300 | 2.70 | 324.81 |
| Linda Sue Briley | Chief financial officer | 2016-10-11 | 7,500 | 2.70 | 20.25 |
| Thomas A. Williams | Chief people officer | 2016-10-11 | 10,000 | 2.66 | 26.60 |
| David Skena | Sr. Vice president | 2016-10-11 | 5,000 | 2.65 | 13.25 |
| Total | Ă‚ | Ă‚ | 256,740 | Ă‚ | 696.89 |
Brief company and financial overview
Ruby Tuesday franchises its casual dining restaurant chain and operates over 650 restaurants in the U.S., Guam and across the globe. The Georgia-based restaurant chain offers high-end casual dining to its customers.
Although Ruby Tuesday has an appealing business, it has a relatively weak financial outlook. The company has a modest financial strength rank of 5, and its profitability rank is a meager 3 out of 10. Ruby Tuesday’s cash-to-debt ratio of 0.31 suggests that the restaurant chain has moderate debt burden. Additionally, the company’s Altman Z-score implies mild distress.
Ruby Tuesday’s profit margins and returns underperform over 93% of global restaurant companies. The company’s current operating margin and return on equity are also near a 10-year low. On the bright side, Ruby Tuesday’s three-year earnings per share growth outperforms 87% of global restaurants and is near a 10-year high of 34.4%.
Top management initiates value-increasing plan
As discussed in the recent 10-Q, Ruby Tuesday’s management launched a “Fresh Start Initiative” to improve the company’s financial profitability and increase shareholder value. With this plan, the directors aim to increase the company’s incremental sales growth and improve cost-efficiency. The initiative also aims to strengthen the balance sheet, which can facilitate growth creation.
Ruby Tuesday’s management expects the initiative to increase the company’s financial profitability in the short term. As the initiative generates growth and value potential, the directors made several insider buys in their restaurant chain. Additionally, Donald Smith (Trades, Portfolio) increased his Ruby Tuesday position by 10.72% during the third quarter.
Conclusions and see also
Based on the above information, Ruby Tuesday is currently a double buy. Premium members have access to several insider features, including CEO and CFO buys, cluster buys, double buys and triple buys. Additionally, the premium membership allows you to export insider data to Excel and view the insider trends. If you are not a premium member, we invite you to a free seven-day trial. Please refer to the membership levels page for information on all of our premium and Premium Plus services.
Disclosure: The author has no position in Ruby Tuesday.
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