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LaSalle Hotel Properties Stock Downgraded (LHO)

NEW YORK (TheStreet) -- LaSalle Hotel Properties (NYSE:LHO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:

  • LHO's revenue growth has slightly outpaced the industry average of 17.9%. Since the same quarter one year prior, revenues rose by 19.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.72, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, LASALLE HOTEL PROPERTIES underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for LASALLE HOTEL PROPERTIES is rather low; currently it is at 21.80%. Regardless of LHO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.50% trails the industry average.

LaSalle Hotel Properties, a real estate investment trust (REIT), engages in the purchase, ownership, redevelopment, and leasing of primarily upscale and luxury full-service hotels in convention, resort, and urban business markets in the United States. The company has a P/E ratio of 95.6, above the average real estate industry P/E ratio of 92.3 and above the S&P 500 P/E ratio of 17.7. LaSalle Hotel has a market cap of $2.31 billion and is part of the financial sector and real estate industry. Shares are up 10.6% year to date as of the close of trading on Tuesday.

You can view the full LaSalle Hotel Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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