As of May 27, 2025, Ruth's Hospitality Group Inc has a Discounted Cash Flow (DCF) derived fair value of $25.90 per share. With the current market price at $21.49, this represents a potential upside of 20.5%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $22.07 |
| DCF Fair Value (10-year) | $25.90 |
| Potential Upside (5-year) | 2.7% |
| Potential Upside (10-year) | 20.5% |
| Discount Rate (WACC) | 7.1% - 9.7% |
Revenue is projected to grow from $506 million in 12-2022 to $986 million by 12-2032, representing a compound annual growth rate of approximately 6.9%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2022 | 506 | 18% |
| 12-2023 | 551 | 9% |
| 12-2024 | 578 | 5% |
| 12-2025 | 631 | 9% |
| 12-2026 | 684 | 8% |
| 12-2027 | 722 | 6% |
| 12-2028 | 768 | 6% |
| 12-2029 | 819 | 7% |
| 12-2030 | 860 | 5% |
| 12-2031 | 939 | 9% |
| 12-2032 | 986 | 5% |
Net profit margin is expected to improve from 8% in 12-2022 to 8% by 12-2032, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2022 | 39 | 8% |
| 12-2023 | 42 | 8% |
| 12-2024 | 44 | 8% |
| 12-2025 | 48 | 8% |
| 12-2026 | 52 | 8% |
| 12-2027 | 55 | 8% |
| 12-2028 | 58 | 8% |
| 12-2029 | 62 | 8% |
| 12-2030 | 65 | 8% |
| 12-2031 | 71 | 8% |
| 12-2032 | 74 | 8% |
with a 5-year average of $28 million. Projected CapEx is expected to maintain at approximately 6% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2023 | 29 |
| 12-2024 | 30 |
| 12-2025 | 36 |
| 12-2026 | 40 |
| 12-2027 | 40 |
| 12-2028 | 43 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 0 |
| Days Inventory | 10 |
| Days Payables | 10 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2023 | 60 | 6 | 26 | 0 | 28 |
| 2024 | 84 | 8 | 36 | (2) | 40 |
| 2025 | 94 | 9 | 40 | 1 | 44 |
| 2026 | 104 | 10 | 43 | (0) | 51 |
| 2027 | 107 | 11 | 46 | (0) | 51 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 22.07 | 2.7% |
| 10-Year DCF (Growth) | 25.90 | 20.5% |
| 5-Year DCF (EBITDA) | 21.51 | 0.1% |
| 10-Year DCF (EBITDA) | 25.42 | 18.3% |
Is Ruth's Hospitality Group Inc (RUTH) a buy or a sell? Ruth's Hospitality Group Inc is definitely a buy. Based on our DCF analysis, Ruth's Hospitality Group Inc (RUTH) appears to be moderately undervalued with upside potential of 20.5%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a buy at the current market price of $21.49.