Stock on Watch: Chuy’s Holdings, Inc. (CHUY)

Company Profile:

Chuys Holdings, Inc., through its subsidiary, Chuys Opco, Inc., owns and operates restaurants under the Chuys name in Texas and 13 states in the southeastern and midwestern United States. The companys restaurants provide Mexican and Tex Mex inspired food. The company’s restaurants offer a range of authentic, flavorful, homemade sauces, including the signature Hatch green chile and creamy jalapeno sauces. It also offers a full-service bar in all of its restaurants providing its guests a range of value-oriented beverage offerings. As of November 3, 2015, it owned and operated 67 full-service restaurants in 14 states. The company was founded in 1982 and is headquartered in Austin, Texas.

Recent News:

For the third quarter ended September 27, 2015, Chuy’s Holdings Inc. reported profit of $4.1 million that exceeded Wall Street expectations. Revenue increased 15.3% to $73.9 million from $64.1 million in the third quarter of 2014.

Chuy’s has done a good job of cutting its costs. Operating expenses dropped by three full percentage points to 79.7%, with Chuy’s attributing the savings to lower grocery, dairy, and chicken costs, as well as falling labor-related expenses.

The company raised its guidance for the full 2015 year once again. The company added $0.03 to $0.04 per share to its previous earnings guidance, now expecting net income to land in a range between $0.86 and $0.88 per share.

Fundamental Analysis:

Ninestocks analyzes several different financial aspects: Growth, Profitability, solvency and efficiency.

Growth – Measures the growth of both the company’s income statement and cash flow.

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Profitability – Measures the historical price movement of the stock.

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Solvency – Measures the solvency of the company based on several ratios.

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Efficiency – Measures the strength and historic growth of a company’s return on invested capital.

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Conclusion:

CHUY’s strengths can be seen in its strong growth, better profitability and robust solvency. Its revenue has increased over last year. Technical indicators signal the bullish signs, as there is a bullish cross in Stochastic oscillator, MACD goes green and RSI is increasing to 57.07. The P/BV ratio indicates it is undervalued compared to the average P/BV ratio of the industry and the sector. We rate Chuy’s Holdings, Inc. (CHUY) a STRONG BUY.