NEW YORK (
-- Ruby Tuesday
) 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, attractive valuation levels and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
- The gross profit margin for RUBY TUESDAY INC is currently extremely low, coming in at 13.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.90% significantly trails the industry average.
- 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, RUBY TUESDAY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.17 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The revenue growth came in higher than the industry average of 1.3%. Since the same quarter one year prior, revenues rose by 12.6%. 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.
Ruby Tuesday, Inc., together with its subsidiaries, develops, operates, and franchises casual dining restaurants in the United States, Puerto Rico, Guam, and internationally. The company operates its restaurants under the Ruby Tuesday brand, as well as owns and operates two Wok Hay restaurants. The company has a P/E ratio of 12.9, equal to the average leisure industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Ruby Tuesday has a market cap of $703.7 million and is part of the
industry. Shares are down 15.4% year to date as of the close of trading on Friday.
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