NEW YORK ( TheStreet) -- Chesapeake Lodging (NYSE: CHSP) 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 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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- CHSP's very impressive revenue growth greatly exceeded the industry average of 18.0%. Since the same quarter one year prior, revenues leaped by 109.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.81, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- In its most recent trading session, CHSP has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for CHESAPEAKE LODGING TRUST is currently extremely low, coming in at 5.40%. Regardless of CHSP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CHSP's net profit margin of -1.60% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff