Story updated at 10 a.m. to reflect market activity.
Shares of National Retail Properties fell 1.7% to $33.12 in morning trading.
The firm set a price target of $30 for the company. The downgrade was driven by sluggish internal growth on long-term leases that won't allow dividends to grow enough in a rising interest rate environment.Must read: Warren Buffett's 10 Favorite Growth Stocks STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. ---------- Separately, TheStreet Ratings team rates NATIONAL RETAIL PROPERTIES as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation: "We rate NATIONAL RETAIL PROPERTIES (NNN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, expanding profit margins, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NNN's revenue growth has slightly outpaced the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 16.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- NATIONAL RETAIL PROPERTIES's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NATIONAL RETAIL PROPERTIES increased its bottom line by earning $1.06 versus $1.03 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $1.06).
- The gross profit margin for NATIONAL RETAIL PROPERTIES is rather high; currently it is at 60.25%. Regardless of NNN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NNN's net profit margin of 42.65% significantly outperformed against the industry.
- Net operating cash flow has slightly increased to $59.34 million or 4.92% when compared to the same quarter last year. Despite an increase in cash flow, NATIONAL RETAIL PROPERTIES's average is still marginally south of the industry average growth rate of 10.91%.
- The net income growth from the same quarter one year ago has exceeded that of the Real Estate Investment Trusts (REITs) industry average, but is less than that of the S&P 500. The net income increased by 8.8% when compared to the same quarter one year prior, going from $40.66 million to $44.24 million.
- You can view the full analysis from the report here: NNN Ratings Report
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