3 Succulent Steak Stocks to Scoop Up Now

A succulent steak meal is often considered a classic dish that can be enjoyed year-round. Many restaurants and steakhouses offer a wide range of steaks based on shapes, cuts, textures. Animal and plant-based steaks with varieties of dishes make it one of the most versatile dishes, suitable for a small dinner or a large party.

While good-quality customized steaks are now available online thanks to the COVID-19 pandemic-driven adoption of online platforms by several restaurants and steakhouses, the pent-up demand to dine on steaks at eateries is helping steakhouses and restaurants generate high foot traffic.

Therefore we think restaurants that specialize in serving  steaks, such as Darden Restaurants, Inc. (DRI), Ruth’s Hospitality Group, Inc. (RUTH), and The ONE Group Hospitality, Inc. (STKS), should benefit from this trend in the near term, especially during the holiday season. So, it could be wise to bet on these stocks now.

Darden Restaurants, Inc. (DRI)

DRI in Orlando, Fla., is a full-service dining restaurant group that owns and operates 1,800 restaurants. The company runs several brands, including Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Season 52, Bahama Breeze, and Eddie V’s. It offers a range of products that include authentic Italian foods, fresh steaks and chicken, salmon, shrimp, ribs, pork chops, burgers, and prime rib.

DRI’s sales for its fiscal first quarter, ended August 29, 2021, increased 51% year-over-year to $2.31 billion. The company’s operating income grew 396.1% from its year-ago value to $280.8 million. Its net earnings rose 539.6% from the prior-year quarter to $230.9 million. Also, the company’s EPS increased 525% year-over-year to $1.75.

Analysts expect DRI’s revenue to increase 32.7% year-over-year to $9.55 billion in its fiscal year 2022. Also, the company has an impressive earnings surprise history; it surpassed consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 77.5% in the current year. Moreover, the stock has gained 22.9% in price over the past nine months and 52.8% over the past year.

DRI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

Also, the stock has a B grade for Value, Growth, and Quality. We’ve also graded DRI for Sentiment, Momentum, and Stability. Click here to access all DRI’s ratings. DRI is ranked #13 of 47 stocks in the A-rated Restaurants industry.

Ruth’s Hospitality Group, Inc. (RUTH)          

Along with its subsidiaries, RUTH develops, operates, and franchises fine dining restaurants under the Ruth’s Chris Steak House name. The Winter Park, Fla., company offers Signature Steaks, Handicraft Cocktails, and other dishes. It has nearly 140 company-owned and franchisee-owned restaurants worldwide.

Last month, RUTH opened its new restaurant at The Mall at Short Hills, in Millburn, N.J., in the Lower Level near Neiman Marcus. This new branch is expected to witness patronage because it is located in a major shopping and entertainment location. For its second fiscal quarter, ended June 27, 2021, RUTH’s restaurant sales increased 286.1% year-over-year to $104.17 million. The company’s total revenues grew 290.3% from their year-ago value to $110.91 million. Its operating income came in at $16.26 million, compared to an operating loss of $24.06 million in the prior-year quarter. Also, the company’s net income amounted to $12.41 million, compared to a $17.6 million net loss in the year-ago quarter.

RUTH’s revenue is expected to increase 53.2% year-over-year to $425.57 million in its fiscal year 2021. In addition, RUTH’s has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Moreover, its EPS is expected to increase by 384.2% in the current year. Also, the stock has returned 67.5% over the past year.

RUTH’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Growth, Quality, and Value.

In addition to the POWR Rating grades I’ve just highlighted, one can see RUTH’s ratings for Stability, Sentiment, and Momentum here. RUTH is ranked #7 in the Restaurants  group.

The ONE Group Hospitality, Inc. (STKS)

STKS is a hospitality company that develops, owns, operates, and licenses restaurants and lounges worldwide. The Denver, Colo.-based company operates through STK; Kona Grill; and ONE Hospitality segments. It manages approximately 57 venues, including 21 STKs, 24 Kona Grills, and 12 F&B venues, which offer a wide range of dishes, including various kinds of steaks.

In July, STKS opened its new STK Steakhouse in the Bellevue Collection shopping center in Bellevue, Wash. This new branch will offer its guests fine dining with an eye-catching view, music, outdoor space, and a wide range of menus. With this location, the company expects to witness significant revenue growth in the coming months.

STKS’s total revenues increased 324.6% year-over-year to $70.76 million for its second fiscal quarter, ended June 30, 2021. The company’s operating income came in at $7.76 million, versus an operating loss of $5.28 million in the prior-year quarter. Also, its net income amounted to $14.11 million, compared to a $3.25 million net loss in the second quarter of 2020. In addition, the company’s EPS came in at $0.41, compared to a $0.1 per share loss in the year-ago quarter.

For its fiscal year 2021, analysts expect STKS’ revenue to increase 86.7% year-over-year to $265 million. It has surpassed the consensus EPS estimates in three of the trailing four quarters. The company’s EPS is estimated to increase 248.8% in the current year. The stock has gained 229.9% in price over the past nine months and 473.5% over the past year.

It’s no surprise that STKS has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Growth and Sentiment.

Click here to see the additional POWR Ratings for STKS (Stability, Quality, Momentum, and Value). In the Restaurants industry, STKS is ranked #15.

DRI shares were trading at $144.33 per share on Wednesday morning, down $1.41 (-0.97%). Year-to-date, DRI has gained 24.05%, versus a 23.15% rise in the benchmark S&P 500 index during the same period.

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.

More...