NEW YORK (TheStreet) -- Ruth's Hospitality Group (Nasdaq:RUTH) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- RUTH's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 6.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, RUTHS HOSPITALITY GROUP INC's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $9.68 million or 14.22% when compared to the same quarter last year. In addition, RUTHS HOSPITALITY GROUP INC has also vastly surpassed the industry average cash flow growth rate of -85.27%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- RUTHS HOSPITALITY GROUP INC's earnings per share declined by 15.0% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, RUTHS HOSPITALITY GROUP INC increased its bottom line by earning $0.38 versus $0.37 in the prior year. This year, the market expects an improvement in earnings ($0.46 versus $0.38).
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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