Markets & Finance

Analyst Action: Ruby Tuesday, Shaw Group


From Standard & Poor's Equity ResearchST ROBINSON HUMPHREY RAISES ESTIMATE, REITERATES BUY ON RUBY TUESDAY

ST Robinson Humphrey analyst Christopher O'Cull tells S&P MarketScope that Ruby Tuesday (RT) reported $0.27 EPS for the second quarter, vs. the Street's mean estimate of $0.20 and company guidance of $0.16-$0.26. He says the upside driven almost entirely by tight cost controls with restaurant margin 190 basis points higher than he was projecting at 19.4%.

During the next 12 months, O'Cull expects the company to repay at least $85 million in debt. He notes the company has cut most of its capex-completing its re-imaging campaign in fiscal year 2008, is planning to open only four company restaurants during fiscal year 2009 (May), vs. 18 constructed in fiscal year 2008, and plans to eliminate its dividend with plans to use resulting free cash to repay debt.

He raises $0.46 fiscal year 2009 EPS estimate to $0.51. He has a 10 price target on the stock.

CREDIT SUISSE RAISES ESTIMATES, TARGET, KEEPS OUTPERFORM ON SHAW GROUP

Credit Suisse analyst Jamie Cook says Shaw Group (SGR) reported third quarter EPS of $0.70 (excluding Westinghouse), beating the Street by $0.07 per share. Cook notes E&C margins soared to 13.3% including $0.09 in favorable project close outs; even adjusted for this, he says margins of 9.9% were 130 basis points ahead of last year.

Looking ahead, Cook says SGR is still on track with respect to Southern, SCANA, and Progress Energy nuclear projects. Additionally, the analyst says the RWE coal plants are on track and are expected to be booked by end of 2009. Cook says assuming the 3 nuclear projects and the RWE coal plants move forward, its backlog would stand at about $38 billion.

Cook raises fiscal year 2008 EPS estimate to $2.32 and fiscal year 2009 to $3.30. The analyst also raises 64 price target to 68.


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