NEW YORK (
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and a generally disappointing performance in the stock itself.
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Highlights from the ratings report include:
- CAPLEASE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CAPLEASE INC continued to lose money by earning -$0.18 versus -$0.33 in the prior year. This year, the market expects an improvement in earnings (-$0.13 versus -$0.18).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 236.6% when compared to the same quarter one year prior, rising from -$1.51 million to $2.06 million.
- Net operating cash flow has slightly increased to $15.93 million or 6.21% when compared to the same quarter last year. Despite an increase in cash flow, CAPLEASE INC's cash flow growth rate is still lower than the industry average growth rate of 25.40%.
- LSE has underperformed the S&P 500 Index, declining 17.57% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The debt-to-equity ratio is very high at 3.04 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
CapLease, Inc. operates as a real estate investment trust (REIT), focused on financing and investing in commercial real estate that is net leased primarily to single tenants with investment grade or near investment grade credit ratings. Caplease has a market cap of $275.1 million and is part of the
industry. Shares are up 2.2% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff
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.