Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Domino's Pizza (NYSE: DPZ) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow.
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- DPZ's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 71.45% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for DOMINO'S PIZZA INC is currently lower than what is desirable, coming in at 31.83%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.03% trails that of the industry average.
- Net operating cash flow has decreased to $19.19 million or 49.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.