EastGroup Properties Inc. Stock Upgraded (EGP)

NEW YORK ( TheStreet) -- EastGroup Properties (NYSE: EGP) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, compelling growth in net income, revenue growth 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 stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • EASTGROUP PROPERTIES has improved earnings per share by 5.0% 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, EASTGROUP PROPERTIES increased its bottom line by earning $0.83 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus $0.83).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 45.1% when compared to the same quarter one year prior, rising from $5.49 million to $7.97 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 15.7%. Since the same quarter one year prior, revenues slightly increased by 7.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to $29.14 million or 11.10% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -37.62%.

EastGroup Properties, Inc., a real estate investment trust (REIT), focuses on the development, acquisition, and operation of industrial properties in the United States. The company has a P/E ratio of 61.7, above the average real estate industry P/E ratio of 57.7 and above the S&P 500 P/E ratio of 17.7. EastGroup has a market cap of $1.55 billion and is part of the financial sector and real estate industry. Shares are up 22% year to date as of the close of trading on Wednesday.

You can view the full EastGroup 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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