As of June 2, 2025, Ruth's Hospitality Group Inc's estimated intrinsic value ranges from $12.93 to $37.82 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $37.82 | +76.0% |
| Discounted Cash Flow (5Y) | $33.04 | +53.8% |
| Dividend Discount Model (Multi-Stage) | $27.99 | +30.3% |
| Dividend Discount Model (Stable) | $17.72 | -17.6% |
| Earnings Power Value | $12.93 | -39.8% |
Is Ruth's Hospitality Group Inc (RUTH) undervalued or overvalued?
With the current market price at $21.49, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Ruth's Hospitality Group Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.74 | 0.91 |
| Cost of equity | 7.3% | 10.0% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 15.9% | 16.9% |
| Debt/Equity ratio | 0.04 | 0.04 |
| After-tax WACC | 7.1% | 9.7% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $22 | $704M | 75.0% |
| 10-Year Growth | $26 | $826M | 57.8% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $34M |
| Discount Rate (WACC) | 9.7% - 7.1% |
| Enterprise Value | $350M - $478M |
| Net Debt | $(1)M |
| Equity Value | $351M - $479M |
| Outstanding Shares | 32M |
| Fair Value | $11 - $15 |
| Selected Fair Value | $12.93 |
| Metric | Value |
|---|---|
| Market Capitalization | $691M |
| Enterprise Value | $690M |
| Trailing P/E | 17.50 |
| Forward P/E | 16.60 |
| Trailing EV/EBITDA | 7.45 |
| Current Dividend Yield | 282.84% |
| Dividend Growth Rate (5Y) | 7.83% |
| Debt-to-Equity Ratio | 0.04 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $11.35 |
| Discounted Cash Flow (5Y) | 25% | $8.26 |
| Dividend Discount Model (Multi-Stage) | 20% | $5.60 |
| Dividend Discount Model (Stable) | 15% | $2.66 |
| Earnings Power Value | 10% | $1.29 |
| Weighted Average | 100% | $29.16 |
Based on our comprehensive valuation analysis, Ruth's Hospitality Group Inc's weighted average intrinsic value is $29.16, which is approximately 35.7% above the current market price of $21.49.
Key investment considerations:
Given these factors, we believe Ruth's Hospitality Group Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.