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NEW YORK (TheStreet) -- Chuy's Holdings (CHUY) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHUY'S HOLDINGS INC (CHUY) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, disappointing return on equity, poor profit margins and weak operating cash flow."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CHUY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.59%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, CHUY is still more expensive than most of the other companies in its industry.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, CHUY'S HOLDINGS 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 CHUY'S HOLDINGS INC is rather low; currently it is at 17.92%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.84% trails that of the industry average.
- Net operating cash flow has declined marginally to $6.80 million or 1.37% when compared to the same quarter last year. Despite a decrease in cash flow CHUY'S HOLDINGS INC is still fairing well by exceeding its industry average cash flow growth rate of -17.57%.
- CHUY's debt-to-equity ratio is very low at 0.08 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 0.39 is very weak and demonstrates a lack of ability to pay short-term obligations.
- You can view the full analysis from the report here: CHUY Ratings Report