NEW YORK (
-- PMC Commercial
) 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, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
Highlights from the ratings report include:
- The gross profit margin for PMC COMMERCIAL TRUST is rather high; currently it is at 52.30%. Regardless of PCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 22.60% trails the industry average.
- Net operating cash flow has significantly increased by 83.40% to -$1.31 million when compared to the same quarter last year. In addition, PMC COMMERCIAL TRUST has also vastly surpassed the industry average cash flow growth rate of -15.43%.
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- The revenue growth came in higher than the industry average of 6.0%. Since the same quarter one year prior, revenues rose by 17.4%. 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.
PMC Commercial Trust operates as a real estate investment trust (REIT). It primarily originates loans to small businesses, principally in the limited service hospitality industry, collateralized by first liens on the real estate of the related business. The company has a P/E ratio of 18.9, below the average real estate industry P/E ratio of 22.4 and above the S&P 500 P/E ratio of 17.7. PMC Commercial has a market cap of $90.1 million and is part of the
industry. Shares are up 0.9% year to date as of the close of trading on Wednesday.
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