NEW YORK (TheStreet) -- Shares of The Macerich Company(MAC) - Get Report were gaining 8.1% to $75.53 Wednesday after rival mall operator Simon Property(SPG) - Get Report disclosed a stake in the REIT.

Simon disclosed that it owns 5.71 million shares of Macerich, giving it a 3.6% stake in the company. Simon said it may ask Macerich to waive a provision that prevents it from owning more than 5% of the company. Macerich recently granted a waiver to another investor that bought a 10.9% stake in the company.

In a note to investors, JPMorgan Chase analysts Michael Mueller and Anthony Paolone said Simon's new stake could make Macerich a takeover candidate, according to Bloomberg. The analysts wrote, "We find it hard to believe that SPG's move is because it wants to be a passive investor" in Macerich.

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TheStreet Ratings team rates MACERICH CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MACERICH CO (MAC) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MAC, with its decline in revenue, underperformed when compared the industry average of 13.8%. Since the same quarter one year prior, revenues slightly dropped by 4.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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, despite the company's weak earnings results. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • MACERICH CO's earnings per share declined by 24.2% in the most recent quarter compared to 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, MACERICH CO reported lower earnings of $0.98 versus $2.07 in the prior year. For the next year, the market is expecting a contraction of 5.1% in earnings ($0.93 versus $0.98).
  • The gross profit margin for MACERICH CO is currently lower than what is desirable, coming in at 27.43%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 12.90% significantly trails the industry average.
  • Net operating cash flow has decreased to $106.33 million or 27.20% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: MAC Ratings Report

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