NEW YORK ( TheStreet) -- Stratus Properties (Nasdaq: STRS) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Real Estate Management & Development industry and the overall market, STRATUS PROPERTIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Currently the debt-to-equity ratio of 1.51 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.
- STRATUS PROPERTIES INC has improved earnings per share by 47.8% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, STRATUS PROPERTIES INC reported poor results of -$2.06 versus -$0.78 in the prior year.
- Powered by its strong earnings growth of 47.82% and other important driving factors, this stock has surged by 34.35% 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.
- STRS's very impressive revenue growth greatly exceeded the industry average of 8.5%. Since the same quarter one year prior, revenues leaped by 1708.8%. Growth in the company's revenue appears to have helped boost the earnings per share.