NEW YORK ( TheStreet) -- Universal Health Realty (NYSE: UHT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • The gross profit margin for UNIVERSAL HEALTH RLTY INCOME is rather high; currently it is at 54.20%. Regardless of UHT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, UHT's net profit margin of 49.30% significantly outperformed against the industry.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • UNIVERSAL HEALTH RLTY INCOME's earnings per share declined by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, UNIVERSAL HEALTH RLTY INCOME reported lower earnings of $1.32 versus $1.55 in the prior year.
  • 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 decreased by 13.6% when compared to the same quarter one year ago, dropping from $4.27 million to $3.69 million.

Universal Health Realty Income Trust operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 29.6, equal to the average real estate industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Universal Health has a market cap of $457.9 million and is part of the financial sector and real estate industry. Shares are down 3.2% year to date as of the close of trading on Friday.

You can view the full Universal Health Ratings Report or get investment ideas from our investment research center.
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