NEW YORK (TheStreet) -- Investors Real Estate (Nasdaq:IRET) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, increase in net income and revenue growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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- INVESTORS REAL ESTATE TRUST reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, INVESTORS REAL ESTATE TRUST increased its bottom line by earning $0.07 versus $0.02 in the prior year. This year, the market expects an improvement in earnings ($0.14 versus $0.07).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 661.0% when compared to the same quarter one year prior, rising from $0.44 million to $3.38 million.
- Net operating cash flow has slightly increased to $20.71 million or 1.56% when compared to the same quarter last year. Despite an increase in cash flow, INVESTORS REAL ESTATE TRUST's cash flow growth rate is still lower than the industry average growth rate of 45.43%.
- 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, INVESTORS REAL ESTATE TRUST underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for INVESTORS REAL ESTATE TRUST is currently lower than what is desirable, coming in at 34.30%. Regardless of IRET's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IRET's net profit margin of 5.60% is significantly lower than the same period one year prior.
-- 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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