NEW YORK ( TheStreet) -- Red Robin Gourmet Burgers (Nasdaq: RRGB) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, solid stock price performance, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • 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 149.1% when compared to the same quarter one year prior, rising from -$4.21 million to $2.07 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.2%. Since the same quarter one year prior, revenues slightly increased by 5.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 151.85% and other important driving factors, this stock has surged by 30.59% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Net operating cash flow has increased to $18.87 million or 13.04% when compared to the same quarter last year. In addition, RED ROBIN GOURMET BURGERS has also modestly surpassed the industry average cash flow growth rate of 11.91%.

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 22.2, below the average leisure industry P/E ratio of 22.4 and above the S&P 500 P/E ratio of 17.7. Red Robin Gourmet Burgers has a market cap of $420.8 million and is part of the services sector and leisure industry. Shares are up 33.7% year to date as of the close of trading on Thursday.

You can view the full Red Robin Gourmet Burgers Ratings Report or get investment ideas from our investment research center.
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