Editor's Note: 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 NEW YORK ( TheStreet) -- Ashford Hospitality (NYSE: AHT) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and poor profit margins.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 18.8%. Since the same quarter one year prior, revenues slightly increased by 9.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has increased to $55.94 million or 26.77% when compared to the same quarter last year. Despite an increase in cash flow, ASHFORD HOSPITALITY TRUST's cash flow growth rate is still lower than the industry average growth rate of 59.97%.
- ASHFORD HOSPITALITY TRUST reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ASHFORD HOSPITALITY TRUST continued to lose money by earning -$0.66 versus -$1.61 in the prior year. For the next year, the market is expecting a contraction of 10.6% in earnings (-$0.73 versus -$0.66).
- The gross profit margin for ASHFORD HOSPITALITY TRUST is currently extremely low, coming in at 12.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.90% is significantly below that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 11.6% when compared to the same quarter one year ago, dropping from -$4.31 million to -$4.81 million.
-- Written by a member of TheStreet Ratings Staff