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NEW YORK (TheStreet) -- American Residential Properties (ARPI) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN RESIDENTIAL PPTYS (ARPI) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMERICAN RESIDENTIAL PPTYS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, AMERICAN RESIDENTIAL PPTYS reported poor results of -$0.78 versus -$0.19 in the prior year. For the next year, the market is expecting a contraction of 16.7% in earnings (-$0.91 versus -$0.78).
- 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 102.9% when compared to the same quarter one year ago, falling from -$4.52 million to -$9.16 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN RESIDENTIAL PPTYS's return on equity significantly trails that of both the industry average and the S&P 500.
- In its most recent trading session, ARPI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- ARPI's very impressive revenue growth greatly exceeded the industry average of 13.7%. Since the same quarter one year prior, revenues leaped by 110.5%. 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.
- You can view the full analysis from the report here: ARPI Ratings Report