Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK (TheStreet) -- Ashford Hospitality (NYSE:AHT) 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 and poor profit margins.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Real Estate Investment Trusts (REITs) industry. The net income has decreased by 7.8% when compared to the same quarter one year ago, dropping from -$15.15 million to -$16.34 million.
- The gross profit margin for ASHFORD HOSPITALITY TRUST is currently extremely low, coming in at 7.85%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -7.04% is significantly below that of the industry average.
- 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, ASHFORD HOSPITALITY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
- ASHFORD HOSPITALITY TRUST's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ASHFORD HOSPITALITY TRUST reported poor results of -$1.26 versus -$0.66 in the prior year. This year, the market expects an improvement in earnings (-$0.92 versus -$1.26).
- Investors have driven up the company's shares by 44.85% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in AHT do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
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