Rating Change #8

Government Properties Income Trust ( 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, growth in earnings per share, reasonable valuation levels and good cash flow from operations. 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 17.8%. Since the same quarter one year prior, revenues rose by 28.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels.
  • GOVERNMENT PPTYS INCOME TR has improved earnings per share by 12.0% 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. We feel that this trend should continue. During the past fiscal year, GOVERNMENT PPTYS INCOME TR increased its bottom line by earning $1.06 versus $0.83 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $1.06).
  • Net operating cash flow has significantly increased by 75.35% to $29.31 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 25.40%.

Government Properties Income Trust operates as a real estate investment trust (REIT) in the United States. It primarily owns and leases office buildings that are leased mainly to government tenants. The company has a P/E ratio of 19.3, equal to the average real estate industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Government Properties Income has a market cap of $988.9 million and is part of the financial sector and real estate industry. Shares are down 6.9% year to date as of the close of trading on Tuesday.

You can view the full Government Properties Income Ratings Report or get investment ideas from our investment research center.

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