Ruth’s Hospitality Group (NASDAQ: RUTH) offers investors more opportunities than 1. On top of the recovery and growth story, there is the stock’s valuation. Trading at 14X earnings, it is at the low end of the restaurant group while performing just as well as any of the others. The rebound in sit-down and higher-end establishments is still underway and is now compounded by widening margins.

Ruth’s Hospitality Group reported an increase in restaurant-level margin driven by a reduction in beef prices which is the company’s primary food cost. The point is that the stock trades at a discount to its 2019 prices while the company outperforms that period. Texas Roadhouse (NASDAQ: TXRH), Darden Restaurants, Inc (NYSE: DRI) and Bloomin’ Brands (NASDAQ: BLMN) all trade above 2019 levels; shouldn’t Ruth’s too? 

Ruth’s Hospitality Group Is A Value Stock 

Ruth’s Hospitality Group is trading like a value stock despite its premium status within the restaurant world. The Q4 results underscore that statement as they delivered growth, margin expansion, balance sheet improvement and capital returns for shareholders. The $138.3 milion in revenue is up 9.6% compared to last year due to a 4.5% comp store gain compounded by store count growth. Compared to 2019, comp sales are up 5.5%. 

Regarding the margin, adjusted EBITDA grew by 12.2% with a 93 bps improvement in food cost to outpace topline growth by almost 300 basis points. The addition of share repurchases left the adjusted earnings at $0.38, up 13% from last year and a full nickel above the Marketbeat.com consensus. These may not be the results to spark a significant rally, but they support the capital return program. 

Cheryl Henry, President, Chief Executive Officer and Chairperson of the Board of Ruth’s Hospitality Group, Inc., commented, “Our fourth quarter performance marked the end to another impressive year for our team at Ruth’s Chris Steak House as we generated double-digit top-line growth and strong earnings for the year. Combined with debt reduction and returning excess capital to shareholders through dividends and share repurchases, we believe we delivered on our total return strategy on all fronts and have given ourselves a solid foundation to build on for the future.”

How Does Ruth’s Dividend Compare? 

At face value, Ruth’s is paying one of the more attractive dividends in the restaurant sector and the attractive qualities improve the deeper you dig. The stock is paying almost 3.0% in yield following the Q4 dividend increase, which is becoming a trend among restaurants. That increase was worth 14% to investors and has the payout ration at an easily managed 32%.

This payout is also above the pre-pandemic level, which lends credence to the idea that the stock should also be trading higher. The highest yield in the immediate group is Darden Restaurants at 3.25%. Darden trades at higher 19X earnings, while Texas Roadhouse trades closer to 22X. Texas Roadhouse pays only 2% as does Bloomin’ Brands, which offers the best value at 9X earnings. This means Ruth’s dividend is among the highest paying and offers value for investors. 

The charts are not impressive. The price action popped on the news, but resistance at the top of the current trading range capped the gains. Now it looks like this stock could continue to trade sideways within this range until later in the year. The top of this range is near $20 and the bottom is near $16.