NEW YORK ( TheStreet) -- Cohen & Steers Inc (NYSE: CNS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 32.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- CNS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- COHEN & STEERS INC's earnings per share declined by 26.7% 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, COHEN & STEERS INC turned its bottom line around by earning $1.07 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($1.36 versus $1.07).
- After a year of stock price fluctuations, the net result is that CNS's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.