NEW YORK ( TheStreet) -- Washington REIT (NYSE: WRE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Despite the current debt-to-equity ratio of 1.55, it is still below the industry average, suggesting that this level of debt is acceptable within the Real Estate Investment Trusts (REITs) industry.
- Net operating cash flow has increased to $32.56 million or 12.17% when compared to the same quarter last year. Despite an increase in cash flow, WASHINGTON REIT's average is still marginally south of the industry average growth rate of 19.68%.
- WASHINGTON REIT has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WASHINGTON REIT reported lower earnings of $0.21 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($0.44 versus $0.21).
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.1%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.