NEW YORK (
-- Famous Dave's of America
) 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, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- 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 on the basis of return on equity, FAMOUS DAVES OF AMERICA INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The debt-to-equity ratio is somewhat low, currently at 0.73, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.45 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Net operating cash flow has significantly increased by 72.64% to $4.90 million when compared to the same quarter last year. In addition, FAMOUS DAVES OF AMERICA INC has also vastly surpassed the industry average cash flow growth rate of 15.53%.
- The revenue growth came in higher than the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 11.1%. 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.
Famous Dave's of America, Inc. engages in the development, ownership, operation, and franchising of restaurants under the Famous Dave's name in the United States. The company operates full-service and counter-service restaurants. The company has a P/E ratio of 11.9, equal to the average leisure industry P/E ratio and below the S&P 500 P/E ratio of 16.4. Famous Dave's of America has a market cap of $78.7 million and is part of the
industry. Shares are down 12.9% year to date as of the close of trading on Thursday.
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