NEW YORK ( TheStreet) -- Ruth's Hospitality Group (Nasdaq: RUTH) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.7%. Since the same quarter one year prior, revenues slightly increased by 7.1%. 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.
  • RUTH's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, RUTHS HOSPITALITY GROUP INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Compared to its closing price of one year ago, RUTH's share price has jumped by 26.74%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, RUTH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
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Ruth's Hospitality Group, Inc. operates restaurants in the United States and internationally. It owns the Ruth's Chris Steak House, Mitchell's Fish Market, Columbus Fish Market, Mitchell's Steakhouse, and Cameron's Steakhouse concepts in the full-service dining industry. The company has a P/E ratio of 14.6, above the average leisure industry P/E ratio of 14.2 and below the S&P 500 P/E ratio of 17.7. Ruth's Hospitality Group has a market cap of $220.3 million and is part of the services sector and leisure industry. Shares are up 23.9% year to date as of the close of trading on Monday.

You can view the full Ruth's Hospitality Group Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff

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