NEW YORK ( TheStreet) -- iStar Financial (NYSE: SFI) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and poor profit margins. Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 4.46 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
- The gross profit margin for ISTAR FINANCIAL INC is rather low; currently it is at 17.50%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SFI's net profit margin of -37.20% significantly underperformed when compared to the industry average.
- The revenue fell significantly faster than the industry average of 6.2%. Since the same quarter one year prior, revenues fell by 27.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- ISTAR FINANCIAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ISTAR FINANCIAL INC continued to lose money by earning -$2.61 versus -$8.07 in the prior year. This year, the market expects an improvement in earnings ($0.32 versus -$2.61).
- Powered by its strong earnings growth of 55.55% and other important driving factors, this stock has surged by 121.38% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.