NEW YORK ( TheStreet) -- Bowl America Incorporated (AMEX: BWL.A) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 5.7% when compared to the same quarter one year prior, going from $1.22 million to $1.28 million.
  • Net operating cash flow has slightly increased to $3.24 million or 9.70% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.08%.
  • BWL.A has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, BWL.A has a quick ratio of 2.27, which demonstrates the ability of the company to cover short-term liquidity needs.

Bowl America Incorporated, together with its subsidiaries, operates bowling centers in the United States. The company has a P/E ratio of 42.3, equal to the average leisure industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Bowl America has a market cap of $48.2 million and is part of the services sector and leisure industry. Shares are up 4.5% year to date as of the close of trading on Wednesday.

You can view the full Bowl America Ratings Report or get investment ideas from our investment research center.
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