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Ruth’s Hospitality Group, Inc. (RUTH), Del Frisco’s Restaurant Group Inc (DFRG): Treat Your Portfolio With a Little Sizzle

In looking forward, the company is forecasting comparable restaurant sales to increase 1.5% to 2.5% for the remainder of the year. Four additional Del Frisco Grille’s are scheduled to open later in the year. Earnings per share are expected to be $0.92 to $0.96 per share. Earnings are expected to grow 18% to 20% in the long run. I like the Del Frisco Grille concept because its price points cater to the lunch crowd and will be a big driver of growth going forward as the company opens more Del Frisco Grilles.

The family steakhouse

Texas Roadhouse Inc (NASDAQ:TXRH) is an American steakhouse with a Western theme. The company operates 395 restaurants in 47 states and internationally. Besides the Texas Roadhouse brand, the company also owns the Aspen Creek restaurant chain with a mountain lodge theme.

In the first quarter of this year, net income was $26.2 million compared to $18.9 million in the prior year. Earnings per share continue to grow on the back of top line sales growth. Positive traffic growth increased for the 12th consecutive quarter. The company opened three company-owned restaurants and two franchised restaurants in the quarter. The company also offers something for dividend investors with a 2% dividend yield. With a payout ratio of 45%, there’s still the potential for the payout to increase.

The growth for Texas Roadhouse, like the other steakhouse chains, is in the international markets. In the Middle East market alone, the company currently has three locations and will add five more by the end of the year. In terms of U.S. expansion, the company has done a great job in bringing store opening costs down. In 2008 and 2009, the total cost to open a new restaurant was above $4 million. Currently, it’s about $3.9 million for a new location. Since Texas Roadhouse appeals to families and a wider demographic with a lower-priced menu, there is still considerable opportunity for expansion in the U.S.

Foolish assessment

All three stocks continue to perform well as the economy recovers and more diners opt to eat out. Each company offers a unique concept and has built a loyal clientele. With the opportunities for expansion in the U.S. and internationally, I see revenues and profits increasing as America’s love affair with steak transitions to a global love affair with steak.

Mark Yagalla has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Treat Your Portfolio With a Little Sizzle originally appeared on

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