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NEW YORK (TheStreet) -- Ruths Hospitality Group (RUTH) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate RUTHS HOSPITALITY GROUP INC (RUTH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 10.0%. Since the same quarter one year prior, revenues slightly increased by 5.5%. 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.
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels.
- RUTHS HOSPITALITY 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RUTHS HOSPITALITY GROUP INC turned its bottom line around by earning $0.67 versus -$0.60 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.67).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, RUTHS HOSPITALITY GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for RUTHS HOSPITALITY GROUP INC is rather low; currently it is at 17.09%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -7.98% is significantly below that of the industry average.
- You can view the full analysis from the report here: RUTH Ratings Report