NEW YORK ( TheStreet) -- Tanger Factory Outlet Centers (NYSE: SKT) 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, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- SKT's revenue growth has slightly outpaced the industry average of 16.3%. Since the same quarter one year prior, revenues rose by 19.9%. 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.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- 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 on the basis of return on equity, TANGER FACTORY OUTLET CTRS has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- TANGER FACTORY OUTLET CTRS' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, TANGER FACTORY OUTLET CTRS reported lower earnings of $0.32 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($0.59 versus $0.32).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Real Estate Investment Trusts (REITs) industry. The net income has decreased by 4.1% when compared to the same quarter one year ago, dropping from $13.00 million to $12.46 million.