NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, O'CHARLEY'S INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for O'CHARLEY'S INC is currently extremely low, coming in at 12.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.00% is significantly below that of the industry average.
- CHUX has underperformed the S&P 500 Index, declining 8.87% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- O'CHARLEY'S INC has improved earnings per share by 27.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, O'CHARLEY'S INC reported poor results of -$1.29 versus -$0.35 in the prior year. This year, the market expects an improvement in earnings (-$0.29 versus -$1.29).
- The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.70 is somewhat weak and could be cause for future problems.
O'Charley's Inc. operates as a multi-concept restaurant company in the United States. The company owns and operates a network of casual-dining restaurants under the O'Charley's, Ninety Nine, and Stoney River Legendary Steaks trade names. O'Charley's has a market cap of $112.1 million and is part of the
industry. Shares are down 28.6% year to date as of the close of trading on Monday.
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