HFF Inc. Stock Downgraded (HF)

NEW YORK ( TheStreet) -- HFF (NYSE: HF) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income.

Highlights from the ratings report include:
  • 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 Capital Markets industry and the overall market, HFF INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 43.80% is the gross profit margin for HFF INC which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 16.30% is above that of the industry average.
  • HFF INC's earnings per share declined by 17.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HFF INC increased its bottom line by earning $1.10 versus $0.37 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $1.10).
  • The change in net income from the same quarter one year ago has exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income has decreased by 15.6% when compared to the same quarter one year ago, dropping from $12.86 million to $10.86 million.
  • In its most recent trading session, HF 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.

HFF, Inc. provides commercial real estate and capital markets services to users and providers of capital in the commercial real estate industry in the United States. The company has a P/E ratio of 13.7, below the average real estate industry P/E ratio of 13.8 and below the S&P 500 P/E ratio of 17.7. HFF has a market cap of $550.5 million and is part of the financial sector and real estate industry. Shares are up 42.6% year to date as of the close of trading on Tuesday.

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

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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