Rating Change #6
SL Green Realty Corporation
has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 18.7%. Since the same quarter one year prior, revenues rose by 39.4%. 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.
- Compared to its closing price of one year ago, SLG's share price has jumped by 37.69%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Net operating cash flow has increased to $141.10 million or 45.40% when compared to the same quarter last year. Despite an increase in cash flow, SL GREEN REALTY CORP's cash flow growth rate is still lower than the industry average growth rate of 59.99%.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 79.2% when compared to the same quarter one year ago, falling from $534.00 million to $111.15 million.
- 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, SL GREEN REALTY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
SL Green Realty Corp. is a real estate investment trust (REIT). The firm engages in the property management, acquisitions, financing, development, construction, and leasing. It also provides tenant services to its clients. The firm invests in real estate markets of the United States. The company has a P/E ratio of 72, above the average real estate industry P/E ratio of 53 and above the S&P 500 P/E ratio of 17.7. SL Green has a market cap of $7.08 billion and is part of the
industry. Shares are up 17.8% year to date as of the close of trading on Tuesday.
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