NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
- RRGB's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 7.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 59.1% when compared to the same quarter one year prior, rising from $4.33 million to $6.90 million.
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that RRGB's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
- The gross profit margin for RED ROBIN GOURMET BURGERS is rather low; currently it is at 22.10%. Regardless of RRGB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RRGB's net profit margin of 3.20% is significantly lower than the same period one year prior.
- 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. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, RED ROBIN GOURMET BURGERS's return on equity is significantly below that of the industry average and is below that of the S&P 500.
Red Robin Gourmet Burgers, Inc., together with its subsidiaries, develops, operates, and franchises casual-dining restaurants in the United States and Canada. The company has a P/E ratio of 29.7, equal to the average leisure industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Red Robin Gourmet Burgers has a market cap of $391.5 million and is part of the
industry. Shares are up 20.2% year to date as of the close of trading on Thursday.
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