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, attractive valuation levels, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 17.3%. Since the same quarter one year prior, revenues rose by 15.8%. 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 debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- 47.60% is the gross profit margin for PMC COMMERCIAL TRUST which we consider to be strong. 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, PCC's net profit margin of 15.10% is significantly lower than the same period one year prior.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income increased by 11.9% when compared to the same quarter one year prior, going from $0.59 million to $0.66 million.
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 19.3, below the average real estate industry P/E ratio of 21.4 and above the S&P 500 P/E ratio of 17.7. PMC Commercial has a market cap of $79.3 million and is part of the
industry. Shares are up 19.6% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet RatingsStaff