RUBY TUESDAY, INC. $6.76 - New York symbol RT

RUBY TUESDAY, INC. $6.76 (New York symbol RT; TSINetwork Rating: Speculative) (865-379-5700; www.rubytuesday.com; Shares outstanding: 63.8 million; Market cap: $429.3 million; No dividends paid) owns 714 casual dining restaurants in the U.S. Franchisees operate 36 outlets in the U.S. and 43 overseas.

In the three months ended June 5, 2012, Ruby Tuesday’s sales rose 2.9%, to $363.2 million from $353.0 million a year earlier. However, same-restaurant sales fell 4.6%, mostly due to stiff competition from other chains.

Ruby Tuesday has developed a number of new restaurant concepts, including Marlin & Ray’s seafood restaurants; Truffles, an upscale cafe; and Lime Fresh Mexican Grills. The company feels these new layouts will help it compete in certain towns and cities. It’s now converting underperforming stores to these banners, and building new ones.

More importantly, the company remains strongly committed to TV advertising, which is key to attracting customers in its market. Ruby Tuesday now aims to advertise on local and cable TV in all of its markets for at least eight weeks of every quarter.

The company’s long-term debt of $314.2 million is high, at 73.2% of its $429.3-million market cap. However, Ruby Tuesday is steadily paying down that debt. The stock trades at 22.5 times the $0.30 a share that the company will likely earn in 2012.

Ruby Tuesday is a buy for aggressive investors.

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