Editor's Note: 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. NEW YORK (TheStreet) -- American Assets (NYSE:AAT) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and poor profit margins.
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- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 7.7% when compared to the same quarter one year ago, dropping from $3.05 million to $2.82 million.
- Net operating cash flow has decreased to $20.05 million or 13.25% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The gross profit margin for AMERICAN ASSETS TRUST INC is currently lower than what is desirable, coming in at 30.40%. Regardless of AAT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AAT's net profit margin of 4.50% is significantly lower than the same period one year prior.
- 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, AMERICAN ASSETS TRUST INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- This stock has managed to rise its share value by 32.64% over the past twelve months. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
-- Written by a member of TheStreet Ratings Staff
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