NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- GRP's revenue growth trails the industry average of 16.1%. Since the same quarter one year prior, revenues slightly increased by 3.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GRP's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for GRANITE REAL ESTATE INC is currently very high, coming in at 83.50%. It has increased significantly from the same period last year. Along with this, the net profit margin of 40.70% significantly outperformed against the industry average.
- Net operating cash flow has increased to $36.67 million or 26.75% when compared to the same quarter last year. Despite an increase in cash flow of 26.75%, GRANITE REAL ESTATE INC is still growing at a significantly lower rate than the industry average of 149.10%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
Granite Real Estate Inc. engages in the acquisition, development, construction, ownership, leasing, and management of industrial rental portfolio of properties. The company has a P/E ratio of 25.3, above the average real estate industry P/E ratio of 10.7 and above the S&P 500 P/E ratio of 17.7. Granite Real Estate has a market cap of $1.62 billion and is part of the
industry. Shares are up 10.5% year to date as of the close of trading on Thursday.
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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.