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NEW YORK (TheStreet) -- Strategic Hotels & Resorts (BEE) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate STRATEGIC HOTELS & RESORTS (BEE) 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. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 29.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Compared to its closing price of one year ago, BEE's share price has jumped by 33.77%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- STRATEGIC HOTELS & RESORTS reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, STRATEGIC HOTELS & RESORTS turned its bottom line around by earning $0.68 versus -$0.10 in the prior year. For the next year, the market is expecting a contraction of 65.4% in earnings ($0.24 versus $0.68).
- 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 27.6% when compared to the same quarter one year ago, falling from $9.26 million to $6.70 million.
- The gross profit margin for STRATEGIC HOTELS & RESORTS is currently extremely low, coming in at 10.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.14% significantly trails the industry average.
- You can view the full analysis from the report here: BEE Ratings Report