NEW YORK ( TheStreet) -- Government Properties Income (NYSE: GOV) has been upgraded by TheStreet Ratings from hold to buy. 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, compelling growth in net income, reasonable valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 17.0%. Since the same quarter one year prior, revenues rose by 40.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels.
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 102.5% when compared to the same quarter one year prior, rising from $6.54 million to $13.25 million.
- GOVERNMENT PPTYS INCOME TR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GOVERNMENT PPTYS INCOME TR increased its bottom line by earning $1.06 versus $0.83 in the prior year. For the next year, the market is expecting a contraction of 3.8% in earnings ($1.02 versus $1.06).
-- Written by a member of TheStreet RatingsStaff