NEW YORK ( TheStreet) -- Carrols Restaurant Group (Nasdaq: TAST) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 7.3%. 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.
- CARROLS RESTAURANT GROUP INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CARROLS RESTAURANT GROUP INC reported lower earnings of $0.50 versus $0.55 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.50).
- The gross profit margin for CARROLS RESTAURANT GROUP INC is rather low; currently it is at 19.70%. Regardless of TAST's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TAST's net profit margin of -1.70% significantly underperformed when compared to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 257.0% when compared to the same quarter one year ago, falling from $2.25 million to -$3.53 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.31%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 260.00% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
-- Written by a member of TheStreet Ratings Staff