Piper Jaffray Downgrades Ruth's Hospitality Group (RUTH) to Sell
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Piper Jaffray downgrades Ruth's Hospitality Group (Nasdaq: RUTH) from Neutral to Sell and lowers its price target from $8 to $5.
The firm believes that Ruth's "could potentially break its debt covenant in FY08" given its current debt/EBITDA ratio of about 4x. If this assumption comes true, Piper believes Ruth's "would be forced to modify its debt agreement, most likely resulting in a higher interest rate and a one time fee for breaching the agreement, which would negatively impact earnings."
Piper points out that management has responded to these claims by saying that "'add-backs' to EBITDA associated with the Mitchell's acquisition provide enough cushion to satisfy debt requirements for the remainder of the year."
Ruth's Hospitality Group, Inc. operates as a fine-dining steakhouse company in the United States and internationally.
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Have you had a good meal at Ruth's Chris lately?
Seth on Jun 23, 2008 07:09 PMThe other thing that needs to be mentioned is that the service, presentation and sometimes even the food at Ruth's Chris is spotty.