NEW YORK ( TheStreet) -- Summit Hotel Properties (NYSE: INN) has been upgraded by TheStreet Ratings from sell 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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.
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- INN's revenue growth has slightly outpaced the industry average of 17.9%. Since the same quarter one year prior, revenues rose by 23.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 1.00, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SUMMIT HOTEL PROPERTIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- INN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 27.35%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The gross profit margin for SUMMIT HOTEL PROPERTIES INC is currently lower than what is desirable, coming in at 28.40%. Regardless of INN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, INN's net profit margin of -4.30% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff