NEW YORK ( TheStreet) -- CapLease Incorporated (NYSE: LSE) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally weak debt management and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- CAPLEASE INC has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, CAPLEASE INC's EPS of -$0.33 remained unchanged from the prior years' EPS of -$0.33. This year, the market expects an improvement in earnings (-$0.13 versus -$0.33).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CAPLEASE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 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 33.9% when compared to the same quarter one year prior, rising from -$13.33 million to -$8.81 million.
- LSE has underperformed the S&P 500 Index, declining 12.38% from its price level of one year ago. 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.
- The debt-to-equity ratio is very high at 4.15 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.