Earnings have come out for a number of companies, and we have updates for some of the latest reporting companies:
- Buffalo Wild Wings (BWLD): Increase PT from $38 to $43, Drop from Hold to Sell
- Ford (F): Increase PT from $17 to $19, Increase from Hold to Buy
- Ruth's Hospitality Group (RUTH): Drop PT from $11 to $9, Maintain Buy
- Ryland Homes (RYL): Maintain PT of $11, Maintain Sell
- True Religion (TRLG): Increase PT from $25.50 to $30, Increase from Sell to Hold
Buffalo Wild Wings (BWLD) - The company continues to be a market favorite, trading at a 25 P/E ratio and 4x book value. We see the company as overvalued at this point at the current price. In this last quarter, the company met our expectations for revenue and operating income. We increased our price target due to the fact that the company is outgrowing companies in its sector. We decreased our discount rate on BWLD. The market is starting to come back to reality with BWLD as it has missed lofty expectations. While we believe BWLD is a good company, we believe these valuations are still a bit too high for this company. A price target of $43 gives the company a P/E ratio of nearly 18.
Ford (F) - We were very pleased with the earnings that Ford put out for the last quarter. We have upgrade Ford from a Hold to a Buy and increased the price target from $17 to $19. The company is sitting rather undervalued right now despite the fact that it beat expectations of earnings and revenue. Further, Ford is looking extremely strong based on the fact that it guided above last year's results, and looks set for growth over 13% this year in sales and 10% next year. Further, the company's share price increased in value as it paid off more debt. Further, the company's investment grade is looking better. Ford is looking healthy and strong for growth in the American auto business. The 6.7 P/E ratio is extremely low, and the future P/E ratio is a very weak 5.9.
Ruth's Hospitality (RUTH) - Ruth remains one of our favorite Buys in the market. A company that is slowly coming back into growth and showing good profitability in the luxury dining market. The company has a great balance sheet, and has lost significant value due to the economic crisis. The company was trading at $20+ in 2007, when it was making less money than it is now. The company has a high discount rate due to high beta. The company has shown great growth coming back due to the enterprise coming back to luxury steakhouse dining and consumers spending better than in the recession. It is delivering good results, and we believe more upside is possible.
Ryland Homes (RYL) - Maintain price target of $11 and Sell. We believe RYL is much more weakly positioned than competitors. The company did see homes orders rise, but we believe it is still probably two years away from profitability. It is significantly overvalued with a 23 future P/E. As they continue to stay unprofitable, we will not be a buyer.
True Religion (TRLG) - We have upped our price target on TRLG from $25.50 to $30 as we decreased our discount rate on the company as it continues to outgrow its competition in apparel manufacturing. Further, the company's earnings and revenue in the past quarter were better than our expectations. The company continues to outshine Wall Street expectations, and we believe it is well positioned to continue to grow from these levels.
Disclosure:I am long RUTH