NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally weak debt management, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 164.8% when compared to the same quarter one year ago, falling from $25.73 million to -$16.68 million.
- Currently the debt-to-equity ratio of 1.94 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, RAIT FINANCIAL TRUST underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for RAIT FINANCIAL TRUST is currently extremely low, coming in at 7.50%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, RAS's net profit margin of -28.30% significantly underperformed when compared to the industry average.
- The share price of RAIT FINANCIAL TRUST has not done very well: it is down 18.03% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
RAIT Financial Trust operates as a self-managed and self-advised real estate investment trust (REIT). The company, through its subsidiaries, invests in, manages, and services real estate-related assets with a focus on commercial real estate. The company has a P/E ratio of 4.5, above the average real estate industry P/E ratio of 4.4 and below the S&P 500 P/E ratio of 17.7. Rait Financial has a market cap of $162.2 million and is part of the
industry. Shares are up 78.5% year to date as of the close of trading on Friday.
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