Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Bravo Brio Restaurant Group (Nasdaq: BBRG) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including poor profit margins, a generally disappointing performance in the stock itself and deteriorating net income.
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- The revenue growth came in higher than the industry average of 2.8%. Since the same quarter one year prior, revenues rose by 17.0%. 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.
- BBRG's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.41 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, BBRG has underperformed the S&P 500 Index, declining 22.03% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for BRAVO BRIO RESTAURANT GP INC is rather low; currently it is at 20.10%. Regardless of BBRG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BBRG's net profit margin of 3.96% is significantly lower than the industry average.
-- Written by a member of TheStreet Ratings Staff