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) -- Ignite Restaurant Group (Nasdaq: IRG) has been upgraded by TheStreet Ratings from sell to hold. Among the primary strengths of the company is its robust revenue growth -- not just in the most recent periods but in previous quarters as well. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.
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- IRG's very impressive revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues leaped by 81.7%. 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.
- IGNITE RESTAURANT GROUP INC has experienced 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, IGNITE RESTAURANT GROUP INC swung to a loss, reporting -$0.26 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus -$0.26).
- The share price of IGNITE RESTAURANT GROUP INC has not done very well: it is down 18.69% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for IGNITE RESTAURANT GROUP INC is currently extremely low, coming in at 9.84%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.12% is significantly below that of the industry average.
- Net operating cash flow has decreased to $8.91 million or 13.29% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, IGNITE RESTAURANT GROUP INC has marginally lower results.