NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, feeble growth in its earnings per share and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- 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 on the basis of return on equity, FIRST POTOMAC REALTY TRUST underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for FIRST POTOMAC REALTY TRUST is rather low; currently it is at 20.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.80% significantly trails the industry average.
- FIRST POTOMAC REALTY TRUST has exprienced 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, FIRST POTOMAC REALTY TRUST swung to a loss, reporting -$0.31 versus $0.13 in the prior year. This year, the market expects earnings to be in line with last year (-$0.31 versus -$0.31).
- The share price of FIRST POTOMAC REALTY TRUST has not done very well: it is down 14.07% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
- Even though the current debt-to-equity ratio is 1.16, it is still below the industry average, suggesting that this level of debt is acceptable within the Real Estate Investment Trusts (REITs) industry.
First Potomac Realty Trust, a real estate investment trust (REIT), engages in the ownership, development, redevelopment, and operation of industrial properties and business parks in the Washington, D.C. metropolitan area, and other markets in Maryland and Virginia. First Potomac has a market cap of $620.7 million and is part of the
industry. Shares are down 26.3% year to date as of the close of trading on Thursday.
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