This website was established seven years ago, to help my family office in our investment activities. Since then, the “coverage” has expanded to include every publicly held restaurant company and nine dynamic non-restaurant franchisors. The “COMPANY DETAILED ANALYSIS SECTION”, the yellow box on our Home Page, leads readers to over 60 descriptive summaries. This information is available elsewhere, but nowhere else as succinctly at a “one stop shop”. Providing this information to our readers provides a discipline to keep ourselves current, in the course of which our readers receive the benefit (for an immaterial expense). In particular, the section on Enterprise Value compared to Trailing Twelve Month Adjusted EBITDA gives all of us a “heads up” on inexpensive situations.
We provide a link just below to our most recent update, about two months ago, on RUTH, which showed that it was trading at 7.3x trailing twelve month EBITDA. Also easily noted was that “net long term debt” (excluding lease obligations, which are not an “obligation” for profitable restaurants) was only about $7M. Casual observers (within which we include ourselves) of RUTH have been aware that an activist or two have been circling RUTH for some time now. There was even a reasonably secure 3% dividend while we wait. Since we all know that sound franchising companies usually trade with with an Enterprise Value anywhere from 10-20x TTM EBITDA, this was a transaction waiting to happen.
https://www.liptonfinancialservices.com/2023/03/ruth/
On this basis, by doing our homework, provided to you within these pages, we have been long RUTH a couple of times in the last year or so, most recently going into today’s announcement.
We make our share of mistakes, and we have had larger gains (and losses) but some situations are easier than others to anticipate. For those of you that are subscribers: please flip through our COMPANY DETAILED ANALYSIS section. Aside from our editorial commentary and “THE WEEK THAT WAS” updates, this is the area that can really pay off for you in terms of reward for a modest use of your time.
Roger