NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and generally poor debt management.
Highlights from the ratings report include:
- PCL's revenue growth has slightly outpaced the industry average of 17.6%. Since the same quarter one year prior, revenues rose by 21.1%. 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.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PLUM CREEK TIMBER CO INC's return on equity exceeds that of both the industry average and the S&P 500.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, PCL has underperformed the S&P 500 Index, declining 8.25% 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 gross profit margin for PLUM CREEK TIMBER CO INC is rather low; currently it is at 18.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.30% significantly trails the industry average.
- Net operating cash flow has significantly decreased to $6.00 million or 92.10% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Plum Creek Timber Company, Inc. is a publicly owned real estate investment trust (REIT). The trust owns and manages timberlands in the United States. Its products include lumber products, plywood, medium density fiberboard, and related by-products, such as wood chips. The company has a P/E ratio of 32.4, equal to the average real estate industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Plum Creek Timber has a market cap of $5.97 billion and is part of the
industry. Shares are up 1.1% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff